Moving Up To A Larger Home

Are you starting a family? Have you outgrown your current home? Or do simply want more room? If you answered yes to any of those questions, you may want to take advantage of the low rates by “buying up” into a larger home.

Here a few tips on buying up:

Be aware that your new loan may be different. As a “move-up buyer,” you may need to get a loan that is a bit different from your current loan. You will need a larger down payment and you may have higher fees and/or a higher interest rate. However, most lenders do offer creative financing, so make sure to check with your mortgage professional about your financing options.

Get your credit in order. Making sure your credit score is the best it can be is always a top priority when applying for a loan, but when you’re buying up to a larger home, you really want to focus on your credit. Typically, lending standards are stricter for larger loans, so start monitoring your credit as soon as possible and make a concentrated effort to improve your credit score.

Understand that your housing costs will increase. A larger home often means more housing expenses. Even if you don’t take a higher monthly mortgage payment into consideration, your utility bills and general upkeep costs will probably be higher—and don’t forget about the cost of furnishing a larger home. Keep this in mind when you’re reviewing your finances.

Avoid overbuying. Do you really need a sunroom? Or a third bathroom? Or a whirlpool bath? You may be tempted to buy your super-dream home, but you should buy only what you need. Don’t stretch yourself too thin with mortgage and home costs. Just because you’ve been approved for a certain loan amount doesn’t necessarily mean you need to spend up to that amount.

Look to the future. Buying a bigger home may be a good move today, but look forward a bit and try to plan out what your future needs may be. Are you going to have more kids? Will you need a larger home at some point? Or will you be downsizing when the kids move out or when you retire? This may help you decide how much more home to buy.

Although your overall costs may be higher in the end, keep this in mind: With today’s low interest rates and affordable home prices, you may be able to get a larger home and pay the same in mortgage costs. As always, consult with your mortgage professional to see what’s best for your situation. ∆