Most first-time homebuyers settling to a house that fits more-so within their budget than within where their life will be in the future.
Your first home – or the one you live in today – may have been good to you at first, but now you got married, had two kids, adopted a dog and enjoyed a few promotions at work.
It’s time to upgrade that home, get a bigger yard, and rejoice in your new-found space, right? Bu before you call Pods and start collecting cardboard boxes from your supermarket, you want to make sure you are, in fact, ready for this plunge.
Learn more: Check out our video on Preparing to Sell Your House
Before you trade up for a bigger home, ask yourself these questions.
Can you really afford to buy a bigger home?
While there are always exceptions to the rule – and working with a Realtor can uncover some true gems in the Blackstone Valley region – generally speaking a bigger house, in a better neighborhood, means you’ll spend more money.
Sure, right now you’re likely pretty comfortable with your current mortgage payment; but can you really afford to bump up that monthly bill?
But the costs don’t just stop at your mortgage. Bigger homes mean:
- More floors
- More rooms
- More places to clean and maintain
- More space to heat and cool
- Higher taxes
How much wiggle room do you have in your budget? Have you really factored in all of your likely monthly costs?
Am I in good position to get a loan?
The state of mortgage lending is in constant flux. You might not have struggled to obtain your loan the first go-around, but it may be harder now than you remember.
Keep in mind, lenders will closely review your income, debts, assets, and liabilities, all in an effort to ensure you don’t exceed the maximum debt-to-income ratio.
Are you keeping up with your credit score? The higher your rating, the better rate you’ll get on your next loan.
Will you be able to sell your house?
Some folks in the market to buy a home own their current home outright, or they have enough cash to cover the purchase of a new home without depending on the profit from selling their current home.
But we stress the word some.
Most homebuyers need to sell before they buy (or else they’re prepared to carry two mortgages). In a perfect world, you’ll make enough profit from your sale to cover the upfront expenses on your new home, including:
- Closing costs
- Down payment
- Moving expenses
But again, that’s assuming you successfully sell your current home.