Buying a home is an overwhelming task, yet many people are choosing to invest in a property they can call their own because it makes good financial sense. As a matter of fact, buying a starter home can be a smarter decision than renting, especially since rent prices have increased drastically since the housing market crisis. Of course, a starter home is not meant to be where you live forever, so you may decide to upgrade to something larger at some point. Knowing when to make this move can also be a challenge. Using this guide, you will know when and if it is time to sell your starter home and upgrade to a larger property.
You Started or Grew Your Family
In many instances, your starter home was purchased by yourself or with your spouse. Smaller homes that are more affordable are ideal for new couples who have not started to build a family. If you have started or added to your family, it may be time to upgrade to a larger home.
Upgrading your starter home will allow you to live in a home with more square footage and one or more extra bedrooms. This will reduce the feeling of being cramped and "living on top on one another," since each member of the family will have their own bedroom and closet space for storage.
You Are Tired of Making Repairs
It can be difficult to find a new, affordable starter home in most parts of the country. Because of this, you probably purchased an older home that has needed a good amount of upgrades and repairs while living there. If you have grown your family and your home is constantly in need of repairs, selling it and upgrading to a larger home that is in better condition will be a smarter decision.
The money you are spending repairing your starter home can be invested towards or on a newer, larger home for you and your family. When searching for your upgrade, make sure to find a home with newer roof, windows, and HVAC system, which are considered the most important and most costly replacements in a home.
You Have a Higher Income
Most starter homes are purchased on a smaller budget. Therefore, if you or your spouse have been promoted and are bringing in more income, investing in a larger, newer home is wise.
Lenders will use your credit report and income statements to determine how much home you can afford. However, taking into account other expenses will be up to you and your spouse.
Unless you are paying cash, a larger, more expensive home will have a larger mortgage payment each month. Also, larger homes will cost more to heat and cool, and you will need to pay more taxes and homeowner's insurance. Lastly, larger homes will require more upkeep, such as cleaning and landscaping, so you will need to account for the time and cost associated with this general maintenance.
You Can Get a Lower Interest Rate
Ideally, you should wait to buy a home until your credit is good enough to secure the best interest rate possible. This is not always an option, though, due to unforeseen conditions in your life and the housing market.
The higher your interest rate, the higher your mortgage payment. So, a high interest rate may not allow you to buy anything other than an older, smaller home. For the best rate possible, experts recommend a credit score of 760 or higher. If you have improved your credit and have a higher score, it is probably time to sell your starter home and buy something new.
Also, it is important to note that market fluctuations alter the nation's interest rate average. After the housing crisis, buying a home was a bit more challenging because lenders felt at risk. If the current interest rate average is low, it is beneficial to upgrade from your starter home.
You most likely made a lot of memories in your starter home, but you can upgrade your home and these memories into a home that is more spacious and suited to your needs. If you are experiencing one or more of the above signs, consider upgrading from your starter home. For help finding homes for sale in your area, contact a real estate agent like Mike Clendenning | RE/MAX Synergy.Share