Thinking about moving to a larger home, a more desirable location, or downsizing to a smaller home. You may want to ask yourself a number of questions to determine if this is a smart thing to do. Such questions may include:
Equity in current home - First, determine the amount of equity in your home. This is calculated by determining the fair market value of your property, less outstanding loan amount owed on property, less closing cost to sell your property. Usually, the first few years of mortgage payments you gain little equity. After five years, normally start to see a greater amount of equity due to principal paid, and inflation of the property.
Current financial condition – Determine whether your income has increased or decreased. If your income has decreased it may be necessary, or advisable to move into a less expensive home. This does not always mean you would be losing living space, but may mean changing location.
Need to change neighborhood – As you grow older, your needs and desires change. If this is true with you, and your current neighborhood is not satisfying your desires, it may be a good idea to make a change for your enjoyment. The desire may be a result of needing less space, and/or maintenance. Downsizing then is the correct thing to do.
Remodeling home – Ask the following questions, would you consider remodeling if there are no city ordinances against making changes you desire, would you mind the inconvenience that goes with remodeling, and would be happy with newly remodel home? If the answer to these questions is no, moving to another home may be the best answer.
Current market conditions – Understand and be comfortable working in current market conditions when selling and buying a home. Realize in a hot market, you will probably sell your home quickly at a higher sales price, but buying a home may cost more. Vice versa, in slow market, it probably will take longer to sell your home, and receive a lower sales price, but may be able to buy a new home at a lower sales price.
Interest rates – Are you able to get a low interest rate. Low interest rate allows you to purchase more home, and makes it easier to find a buyer for your current home.
Maintaining current home – Another question to ask yourself, is your current home becoming more difficult to maintain? If this is true, then moving into a garden home, or condo may be a great option.
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