There are lots of good reasons why you may want to sell your home and more. But if you are just barely making your payments on the current home when can you afford to move to a new home?
The ideal reason is that you got a raise at work, inherited money or have been saving up for just this purpose.
Another necessary reason may be that you simply cannot afford the home you live in and need to downsize.
In each case, there are a few things to consider about whether or not you can afford the move to a new home right now.
Basic Costs Of Moving
Sure, there is the cost of the mover but you can reduce some of that by moving things yourself with a rental truck. But that is still an expense you need to consider. The other matter is getting your home ready for sale. We get accustomed to leaky faucets, moisture stains on walls, squeaky doors and shrubs around the house that were last pruned before we moved in.
Like the job of moving furniture, you can do a lot of the work yourself with clippers, a paintbrush and a can of three-in-one oil. But if the furnace needs repairs you will need to pay for that before the home inspector arrives.
Financial Costs Of Selling And The New Mortgage
When you sell your home you also pay a commission to the real estate agent and a host of other fees at the closing. These come out of what you are paid for your home. Make sure you are clear about just how much money you will have to apply to your new mortgage as well as moving expenses and all incidentals associated with your move.
Are You Upsizing Or Downsizing?
You will more likely be able to move to a new home on your current income if you are downsizing to a less expensive home with a less costly mortgage. The lender who pre-approves your loan should be able to help you know just how much you will be able to afford in a new home. And then your real estate agent can start showing you homes well within your price range.
Cash In The Bank Helps
If you are anticipating a move, start putting money aside from every paycheck. This money can be used for all of the incidentals that come with a move. Or if you are patient and thrifty you may be able to accumulate enough to help with the down payment on your new home and end up with a lower interest rate, less paid for mortgage insurance and lower monthly payments. And, if you have not already done so, work to reduce your credit card debt. The interest rate you are paying on that plastic is far and above that which you will pay for your home mortgage.
Interest Rates And Home Values
The only thing you can do if the housing market is soft is very often to just wait until it comes back. Spend the next few months or year stockpiling cash so that when the value of your home goes back up you will have the money to make the move more easily.