THE TIME TO MOVE UP IS RIGHT NOW
As our lives change over time, so can our housing needs. You may find that you have outgrown your current home with the addition of children, a dog, cat or even a goldfish or two. Maybe you are in a better place financially and you want a newer, more luxurious home. If the idea of more amenities, a better location, or more square footage entices you, you may be ready to “move up”. There has never been a better time to move up than right now. And the reasons are …
- Your current home has re-bounded in price since the lows of 2008-2010. When that first home was purchased, you may have used a low-down payment first time buyer loan. Now that home is worth 25-50% which would afford you the opportunity of putting a large down payment on that next home. With that large of a down payment your qualifying may be easier for a larger mortgage.
- Be thankful that you don’t have to pay your parents interest rates. Although interest rates have increased some, they are still in a historically low range. This allows you to borrow more money at a much lower rate. And a fixed rate loan keeps that payment the same, even as your income continues to climb. The Federal Reserve plans to increase interest rates 3 times in 2018 and 3 more times in 2019. So there is no time to waste if you want to keep that payment low. A 1.5% increase in rates will increase your payment on a $400,000 loan $372 per month.
- The inventory of available homes on the market in the affordable price range is extremely low. This may allow you to sell your current home faster and easier. You may not need to do all those repairs. There are more buyers for your home today. This gets you a higher price and gives you the opportunity, if needed, to rent back while you find that next home.
- In searching for that next home, the two categories are re-sale and new. Be prepared if you are looking at re-sales to have some competition. That means having your current home sold or in escrow. Contingencies in a strong market are not what today’s sellers are looking for. Builders have finally rebounded since the mortgage melt-down and many new subdivisions are popping up. There are advantages to both types of purchases but that may be another article, altogether.
Now that you have decided to make the move, what can you expect??
A bigger house or better neighborhood means more money.The average step up in price is 50-60% higher in value.Expecting the same house payment, utilities and property taxes is not reasonable.You now have more house to clean and perhaps a bigger yard to maintain.Working up a budget is critical.But… you did it once with that purchase many years ago and you can do it again.Now you have room to entertain, maybe 2 ovens instead of one. Perhaps a formal dining room for those holiday dinners is in the cards.Maybe your children get into that school district with the higher test scores.Now is the time to make that move when the jump is the easiest.