Homeownership is a significant part of the American Dream. However, your first home may not be your last. You may not be ready to forfeit homeownership, but there’s a good chance you’ll find yourself upsizing or downsizing as the needs of your household fluctuate. In cases where new members of the household are arriving, your current house may be too small. On the flip side, empty-nesters often find themselves with “too much house” and a need to downsize. Whether you’re expanding your needs or doing away with excess, there are a few things you need to know about your upcoming move.
Regardless of whether you’re moving up or down in the size of your home, one thing remains true: You need a qualified professional real estate agent to help you navigate the process. In most cases, you’ll be selling one home while buying another, so an agent can help you with both aspects.
Contingencies: Many buyers may place an offer on their next house, based on the sale of their current house. This may work well for you, but may be a deal-breaker when you put in your offer. Talk with your real estate agent about whether or not your new home should be contingent on the sale of your current home. This can be more complicated if you’re moving to another state.
As with your first home purchase, your credit score must be worthy. Avoid making any major purchases before and during real estate transactions.
Talk with your lender. Even though you’ve had your mortgage and paid on time, you may not re-qualify for a loan on your new house. Or, you may find yourself paying an early pay-off fee. What’s scary for a lot of people moving from one house to another is the risk of holding two mortgages at the same time. When you opt out of the contingency factor and put an offer on the new house, your current house may not sell before you close on the new house. You may choose to keep your current house and use it as a rental property. Discuss options at length with your financial institution and your real estate agent.
Down payment and closing costs: Substantial savings are required whether you’re downsizing or upsizing your house. You’ll still be expected to produce a down payment, earnest-money deposit, and closing costs on the property you purchase, even if you haven’t yet sold your current house.
Before listing your current home for sale, you may consider having an appraisal and an inspection. Identifying and rectifying any problem areas in your home could improve your chances of selling with more profit and a faster timeline. This could also provide an opportunity to implement minor upgrades to increase the value of your house.
Property tax transfers and homeowners insurance are other factors to consider when planning to upsize or downsize your current house. Your property tax rates may not be the same, and your homeowner’s insurance may be more or less expensive. Do your homework to determine differences in rates to eliminate unwelcome surprises. This is especially true if a downsize is spawned from financial distress.
Another expense to factor in to your moving budget is the cost of the move itself. Whether you’re renting a moving truck, paying movers, or both, don’t forget to figure in moving expenses.
When downsizing, one of the most difficult challenges is in reducing the amount of items you’ll take with you. Especially in cases where you’ve lived in the same house for decades, there’s no such thing as “small stuff.” You’re talking about memories, keepsakes, and items that hold sentimental value. On the contrary, when you’re moving up into more space, you may find that the furniture that filled your current house to max capacity might not full your next house. Sorting, organizing, and arranging your furnishings is a difficult but necessary part of the process. Consider the costs of storage when downsizing, and the cost of furnishings when upsizing.
Moving from one home to another is not a spontaneous decision. There are many steps along the way that require consideration. Talk with your real estate agent and lenders, investigate property taxes and insurance, and don’t forget to figure in the incidental expenses of moving.
Your real estate agent is the best source of information about the local community and real estate topics. Give Marbelia Murillo a call today at 704-622-0602 to learn more about local areas, discuss selling a house, or tour available homes for sale.