Many homeowners are asking themselves if now a good time to move up is. Between price reductions and record low interest rates it may just be the right time.
With home prices still at record lows, Buyers can get more home for less money under today’s housing conditions. Buyers will also pay a smaller amount of interest over time and can snag that dream home for a fraction of its boom era price. Additionally, with the large number of distressed homes on the market, you may even find a home at a steep 10 to 20 percent discount.
Before you start mentally decorating that dream home, however, you should consider what “moving up” means for you. For some buyers, moving up means a better neighborhood. For others it means a bigger home with more space or amenities.
Here’s what every buyer should consider before making the move.
Where do you stand on equity? In simple terms, equity is the difference between what you owe and what your home is worth. You might already know this amount, but if you don’t, you can always call your lender to get more details.
Despite recent declines in home prices — and some areas have had steeper declines than others — if you’ve lived in your home for over five years you may have built a substantial amount of equity. Equity gives you some wiggle room during the selling process. You can rest a bit easier that you will sell for a profit instead of a loss.
What is the state of your financial situation? Some jobs are more stable than others. You do not want to take on a new financial burden if you fear that there may be downsizing at your company. Are you a two income household? What would happen if one of you were to lose your job? Can you really afford to move up? This means having at least 20 percent to put down, being able to pay off your current mortgage, and not having to lay a finger on your retirement funds to make the new purchase.
Are you willing to move during a market that is still seeing home price declines? Yes, you might be able to get into your dream home, but will be you also might see your new home’s value decline in the months and years to come.
What is pricing like for your current neighborhood? You may wish to get a comprehensive market analysis to find out the current value of your home as well as the specifics on your neighborhood competition.
What is your real reason for wanting to move? Are you an empty nester wanting to simplify life by downsizing to a smaller home, condo, or town home? Are multiple generations living under the same roof? Are you wanting to move to a newer neighborhood? Consider what it is that you really want.
Does moving up make sense for you at this moment in time? While there are some great deals to be had, it has to make good financial sense right now.