Moving on Up: Is It Time for a New House?

You no doubt loved your house when you bought it.

You gaped in awe at the updated kitchen and natural light streaming through the windows. You saw possibility in the barren white walls and spotless wood flooring. You couldn’t wait to make that place your home.

But over time, it’s lost its luster. Maybe it’s too small and cramped now. Maybe the neighborhood has gone south. Maybe your lifestyle has changed.

Whatever the reason, you’re thinking of a move.

The Difficulty in Moving Up

Buying a move-up home may not be as simple as your first purchase was.

Now, you’re not just running out of lease or moving out of your parents’ basement. Instead, you’ve got a home to sell (or rent out), before you even have the cash to purchase that new home.

That complicates things a little — and it means being extra careful about timing.

Is it time for you to move onward and upward? Should you wait it out a few years until you have more equity or your kiddos go to college? The answer is different for everyone.

Should You Stay or Should You Go?

There are two sides of the trade-up coin: the personal and the financial. You’ll need to consider both when determining the best time to sell your current home and purchase a new property.

Let’s look at the personal factors first:

• Family size – Have you had kids or adopted a few pets since you moved in? Are your little ones sharing rooms and just fed up with it? Maybe your kids have gone to college and your home’s just too large now? Your home should match your family’s evolving needs and demands.
• Location – Has crime gone up in your current neighborhood? Are the schools not to your liking? Do you want to be closer to certain amenities or cultural opportunities? As your life changes, so does what you need from your community.
• Goals – Are you hoping to grow your business? You might need space for a home office. Looking to get fit and lose weight? Room for a home gym might help you get there. If your home is no longer helping you reach your personal goals, a move might be necessary.
• Abilities – Are you unable to care for the home and yard like you used to? Just want a lower-maintenance property? Moving to a smaller house — or even a condo or managed townhome community — could help.

Financially, you’ll want to consider things like:

• Your equity – The more equity you have in the home, the more you’ll profit from selling the property. If you’ve only owned your home for a year or two, you’ll probably want to wait a few more years until you’ve built up more equity.
• Your cash flow – There are lots of expenses that come with buying and selling a home, so you’ll want a financial cushion to soften the blow. You’ll need cash to cover moving expenses, closing costs, inspections and more.
• Your employment/income outlook – Are you on solid ground with your job? Could a change be in the air for your income or career? You might want to wait until things are more consistent to purchase a new home.
• The local housing market – Is there demand for a home like yours in the area, or would you have to slash prices in order to get noticed? On the buying end, are their properties on the market you like and can afford? If you’re not sure, talk to a local real estate agent for advice.
• Mortgage rates – Make sure you know what your existing mortgage rate is before you decide to buy a new home. If current rates are significantly higher than the one on your existing loan, it could cost you thousands in extra interest over the years. Talk to a loan officer for advice if you’re not sure.

If the financial and personal factors don’t all point in the same direction, you can always consider a remodel instead. Home additions, renovations and other updates might be able to help you add more space or repurpose your existing ones to better meet your goals. Plus, financing options like HELOCs, home equity loans and cash-out refinances can let you leverage your equity to pay for those updates, lightening the financial load significantly.

Move Up or Stay Put, We’re Here

Whether you decide to buy a move-up home or just want to tap that equity to pay for renovations, SnapFi can help. Contact us today to for personalized advice and guidance.