Move Up Buying and You
As our lives change over time, so can our housing needs. You may find that you have outgrown your current home, or maybe you are in a better place financially and you want a newer, more luxurious one. If the idea of more amenities, a better location, or more square footage entices you, you may be ready to “move up”. With today’s affordable home prices and low mortgage rates, there has never been a better time to do so.
One of the advantages of being a move up buyer is that if you sell your current home before you buy the new one, you can use a portion of the equity towards the purchase. This could be a huge benefit when it comes to the down payment. Instead of looking to your bank account for the down payment money, you can look to the net profit of your home.
Although moving up can be enticing, there are a few things you need to consider when making this decision:
How much equity is in my home?
To find out how much equity is in your home, you will need to find the value of your home and subtract the amount you owe. Let's say, for example, that you owe $90,000 on a home that you have owned for five years. You originally bought the home for $120,000 and the value has appreciated to $135,000. When you bought the home, you put $20,000 down. In this case, your current equity would be $45,000.
What is the market like in my area?
The prices of homes can widely vary within different parts of a city. Based on the housing prices in your area, your home may sell for significantly more than you bought it for, less than you bought it for, or somewhere in between. If you are wanting to use the equity of your home for the down payment on a new home, it is wise to understand what the housing market is doing in your area.
How much will selling my home cost?
In order to sell your home, you may need to invest in structural or cosmetic upgrades to make it appealing to buyers. Additionally, you will want to plan for real estate commissions, which can range from 4% - 6% of the price your home sells for.
What will the selling price of my home be?
While there is no way to tell how much your home will sell for before it sells, a REALTOR can provide you with a market analysis of what homes have sold for in your area and can advise you on what to price your home at. You will want to make sure your home is priced realistically so that it will sell faster!
Once you’ve decided that moving up is the right choice for you, you can find a KW REALTOR to suit your needs. Along with our knowledgeable agents, access to technology, and excellent client support, we'll help make selling your current home and buying your next home an uncomplicated and rewarding process.