RSS Feed

MOVING ON UP!

MOVING ON UP!

“Hold yourself responsible for a higher standard than anybody expects of you. Never excuse yourself.” –  Henry Ward Beecher

The kids are warring over bedroom space — even the dog wants more room! So one Saturday you innocently load everyone into the car, in search of a larger home. Emotionally, it makes sense.

But financially, are you prepared to part with some of your hard-earned equity (not to mention a bit more of your paycheck) in order to purchase a larger home? It’s going to cost you money to move up.

Simply explained, equity is the difference between what you owe on your home (all its mortgages, liens, etc.) and what you could obtain on the open market LESS YOUR COSTS OF SALE. (And the last part of that sentence is often overlooked by over-zealous move-up buyers!) But looking before you leap can make the difference between a financially prudent new purchase and a haunting economic disaster! Let’s evaluate the costs.

1) Some increased costs of purchase are obvious: You’ll be paying a larger mortgage payment monthly to own a larger home (depending on your down payment) your taxes will increase, and yes, even your home owner’s insurance will be more. And if your down payment isn’t at least twenty percent of the purchase price, you may even have private mortgage insurance to pay. It all adds up; but

2) Some increased costs of purchase aren’t so obvious: What about upkeep and maintenance? Utilities? Even the extended period of time it takes to clean the home on the weekend, taking time away from your family and other “fun” things—are you prepared for that?

3) One category most of us overlook when taking the “move up” plunge is to evaluate the chunk of equity it will cost us to sell our existing home, pay our buying costs, and move into another. Since 80% of all sellers hire a broker to sell their existing home (often saving money overall in doing so), you’ll no doubt benefit by that cost. You’ll add to it the additional sales costs of title insurance, transfer taxes, deed preparation, tax pro-ration—-basically all the costs paid by the seller when you purchased the home.

So should you move up? The answer depends on what you’re trying to achieve. If you’re purchasing a home that will appreciate faster than your current one, gives you more space, is in a better neighborhood, and/or will make you psychologically happier, it may make sense to move. It’s true that happiness becomes the over-riding factor to the move-up buyer. Yes, you may want different features than you have in your current home; but you also know that housing is housing— but being happy where you live is paramount!

The bottom line is that homebuyers purchase with their “gut” and justify the purchase with their wallet. Long after you’ve crunched the sales cost numbers and consulted with an expert to evaluate a new neighborhood, you’re still likely to follow your gut instincts and purchase the home that tugs hardest on your heart-strings. After all, it’s what living the American Dream is all about.

Advertisements

About Mme Jocelyne

Hi, I'm a transplanted northerner–(born and raised in New York to French immigrants–Oui je parle Francais)-living in Florida for 20 years. In the 70's I worked as a realtor in the Bronx – City Island to be exact. Then I started a family and didn't keep up my license. I aspired to a career in architecture, so I went to New York Institute of Technology for three years, moved to Florida and finished my degree at the University of Florida in Gainesville. After 10 years of working in my dream career I sustained an injury to my shoulder. This injury never healed because I was constantly on the computer doing cad design. I finally decided to make a career change – something where I could use my training as an architect. Needless to say, I was worried – where will the money come from? How will I be able to afford my career change? But, I put my faith in God and went for it. It’s the best move I ever made, other than my husband, children and dogs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: