If you read my last blog post about deciding whether you should upgrade your house, you’ll definitely want to read about the financial implications of doing so. Upgrading your home to a larger house is a big decision with many considerations. You need to be confident that you can handle the upgrade to your expenses along with the upgrade to your housing. Think about the following:

  • Do you need to sell your current home before you purchase a new one? For most people who don’t own their home outright, this will be the case. If you do need to sell, consider the following options. 1. Find a new home and make your offer conditional on selling your current home 2. Put your house on the market and sell it conditional on finding a new home. It works both ways. Option 2 gives you a little more leverage to work with when you’re out trying to buy your new home.
  • Consider a bridge loan. This type of loan can be helpful if you take possession of your new home before you have to move out of your current home. The cost is minimal for a short period of time and allows you the flexibility to complete your move at a more leisure pace. However, you do need a firm offer to purchase your existing home to qualify for a bridge loan.
  • Find out if your mortgage company will let you transfer the mortgage. If they won’t, what is the Breakage Fee?
  • Budget, budget, budget! Real estate fees, closing costs, down payment and moving expenses. You should have a detailed estimate for what your move will cost.  
  • Calculate what your new mortgage payments will be on the larger home. Depending on how much more home you need there is a good chance you’re mortgage payment could be close to what you’re paying now. If you have a healthy amount of equity that your carrying over your purchase costs & monthly payments may be more manageable than you think

Bigger homes come with bigger expenses so it’s important to make sure your finances are in order before upgrading your home. I’ve created a budget worksheet for Buyers & Sellers that you can download for free to help you decide if you’re ready to upgrade. 

Posted by Greg Dewar on
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