We hear a lot about people downsizing and simplifying, but if you are looking for a larger home, now is a great time to sell your smaller home and move up to something that better suits your wants and needs. Perhaps you have a growing family and need more space, or an additional income-earner has joined your household or maybe you have enough equity in your current home that you can now afford your dream home. Whatever the reason, movin’on up is an exciting prospect!
Ok, now let’s contain that excitement a bit and think about what it means to purchase a more expensive house. First, just because you can afford something on paper, doesn’t mean you should commit all your resources to the most expensive property on your radar. It would behoove you to take a thorough look at your current budget and then play with the numbers a bit to determine how much more you’re willing to spend each month on a higher mortgage payment. A dream house is wonderful, but being house-poor is not. Think about your lifestyle and don’t make the mistake of getting into a financial bind that doesn’t allow you to do the activities you enjoy.
When financing your new home, you have a couple of options. If you haven’t sold your current home yet, you can choose a home equity loan or abridge loan to make the down payment on the new home. A home equity loan allows you to borrow against your current home’s equity and is usually less expensive than other loans. A bridge loan is a short-term loan that is used until you can obtain permanent financing. Because they are short term, the interest rates on them will be relatively high.
Before you put your house on the market and commit to purchasing a new one, educate yourself about the prices of houses in the areas where you will be selling and buying. Whether it’s a buyer’s market or a seller’s market, a professional Realtor will be able to assist you in navigating the process. The goal is to sell high and buy low, and in today’s market that is an achievable dream!
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