There are times when moving to a larger home is a financially sound decision, but other cases call for the opposite. Upgrading to a larger home is a trickier process than, say, switching from a smaller TV to a 50-inch flat screen. This is simply because upgrading to a larger home has long-term repercussions that can disable you financially. Imagine getting tied to a 15- to 30-year mortgage, or 180 to 360 months of making mortgage payments. Here’s five ways to know when it’s time to upgrade to a more spacious and luxurious living space.
You may have found your existing home when it was just you and your spouse. But over time, children and pets will change your lifestyle and increase your need for space. Raising your children in a cramped apartment or a small traditional house can be difficult as it restricts the activities you can do as well as the possessions you can keep. Upgrading to a larger home with a backyard or front porch can give your children room to grow and, at the same time, give you and your spouse a private space to take a breather when parenting becomes exhausting.
Good Financial Status
Getting a raise or promotion could signal that you are in healthy financial shape and that upgrading to a larger home is an option on the table. Moreover, clearing out outstanding debt from your credit cards and completing your mortgage payments on the car or existing home should also be encouraging factors to make the leap forward. Keep in mind, though, that getting a mortgage is much harder nowadays than it was before. Unless you have a credit score above 700, expect to do some heavy negotiating for your mortgage rates.
Good Market Demand For Existing Home
Unless you can purchase a new home with cash in hand or without needing to sell your current abode, you’ll need to be mindful of how easy and quick you can get rid of your existing property. Selling your existing property will cost money for advertising and hiring a realtor to handle the legal paperwork and provide other clerical services. Depending on your current location and the market demand for the property type, it can take six months to a full year to get the property off your hands. Avoid choosing to carry two mortgages at the same time as this can ruin both your lifestyle and your credit score.
Reasonable Ongoing Cost Increase
The down payment and estimated monthly payments thereafter are not the only expenses you should be bracing for when upgrading to a larger home. Having a white picket fence and premium grass lining the front porch is the absolute home buyer’s dream, yet a more important change to look out for is the higher utility bills. Running a larger home means more lighting, power outlets, and more individual parts to maintain. You’ll need to purchase new equipment, such as a snow blower or a lawn mower, to account for these new responsibilities. Before shopping for larger houses, make sure you consider the ongoing expenses of maintaining it and whether or not you can keep up with such expenses.
If the neighborhood you are living in right now is becoming unsafe or too congested, it’s a viable cause for upgrading to a larger home in another neighborhood. “You don’t necessarily need a larger home when switching neighborhoods, but if it’s a long-term investment, you’d want to have bigger space to adapt to lifestyle changes offered by a more vibrant and developed neighborhood,” said Homes & Hearth, LLC. When shopping for larger homes, vet the area around it. Is it safer than your current neighborhood? Does it have the facilities to accommodate your needs, such as schools, libraries, workspaces, or dog parks?
Upgrading to a larger home should be a decision stretched within the span of more than a week. It requires in-depth assessment of your financial preparedness to take on not just the cost of a larger home, but the responsibilities entailed with it, such as lawn maintenance. Regardless of your budget, be careful not to overpay for your new home just because you can shell out the money for it.