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Budget for the move (5k?), transaction costs (real estate fees, lawyer, inspection, survey, taxes, commission) and any costs associated with getting your house ready for sale or required by buyer. These have to be paid out in lump sum and can not be mortgaged.
I think it's a local move, the OP may be able to do it himself, that would save significant money.
Figure out how much you can afford to pay for a bigger/more expensive house. Then go find one you like at that budget. If you don't find anything you like, that you can afford, don't move, and wait till you have more money.
Don't forget, once you decide to start chasing after "bigger and better" you'll be increasing your fixed overhead with each step. You'll be reducing your ability to weather financial storms.
I've been in my starter home for almost five years and am making a little more money, have some more equity to.pull out. And I am dreaming of the home that's a better fit.
How much should I be ready to spend to upgrade homes? Obviously I can calculate a new monthly payment but I am trying to understand how much I should be ready to spend to make a move happen soup to nuts
Or more generally if you wanted to step up homes. What did you need to do before you knew you were ready?
I think the decision of how much to spend on your upgrade home is fundamentally different than deciding how much to spend on a starter home.
With a starter home, you have to set your minimum requirements and then usually you have to stretch to the maximum of affordability, or close to it, in order to meet those minimum requirements. It's not so much a decision as a struggle to find something that is acceptable that won't totally blow you away financially. At least that was the case for me.
When it's time to upgrade homes, it's a completely different scenario. I think it's never wise to stretch for an upgrade home the way you did for the starter home. The upgrade home should be one that you can comfortably afford, and depending on how old you are, you should consider a 15-year mortgage rather than a 30-year mortgage so that it will be out of the way before retirement.
If you follow the classic guidelines for how much house you can afford (mortgage+taxes+insurance as a percentage of gross monthly income), and take that to the maximum, it will leave you perpetually tight on money. As the years pass, you want the percentage of your income going toward housing to decline so you have more money to spend on other things and to save for retirement. Those guidelines/ratios might be feasible for a person early in his/her career, but they should not be maintained as you get older and/or your income increases.
You also have to look at your liquidity situation. You shouldn't have too much of your assets tied up in your home as you progress through your life and career. Once again, with your first house, you usually have little choice but to tie up almost all your assets in the house. But as time passes, you should be building up assets other than your house, and you shouldn't strip them down again to get a bigger house. The right balance needs to be maintained and over time, you need to grow other assets relative to the money you have tied up in your house.
The last thing to mention is that as your income rises, it becomes more volatile. That's another reason that the income ratios used for people with average incomes who are young aren't necessarily appropriate for people with higher incomes, especially as they get a bit older. The assumption that income can only grow becomes less valid with higher income and higher age. Generally, the higher the income, the lower the percentage of it should be committed to fixed monthly payments for housing.
I've been in my starter home for almost five years and am making a little more money, have some more equity to.pull out. And I am dreaming of the home that's a better fit.
How much should I be ready to spend to upgrade homes? Obviously I can calculate a new monthly payment but I am trying to understand how much I should be ready to spend to make a move happen soup to nuts
Or more generally if you wanted to step up homes. What did you need to do before you knew you were ready?
What's a better fit? Something practical like more children so more bedrooms?
If it is just to have a nicer house, I would wait. If you have more income, switch to a 15 year mortgage and pay off your current house.
Before 2008, upgrading to a bigger houses after five years was common. The current economy is far more unstable. Unless it was absolutely necessary, I wouldn't move now.
Besides brokers, mortgage fees, lawyers, and other fees of moving, the cost of fixing up a new house is significant. Even if you can remove wallpaper and paint the walls yourself, there will be additional touches that you'll want to do.
I've been in my starter home for almost five years and am making a little more money, have some more equity to.pull out. And I am dreaming of the home that's a better fit.
How much should I be ready to spend to upgrade homes? Obviously I can calculate a new monthly payment but I am trying to understand how much I should be ready to spend to make a move happen soup to nuts
Or more generally if you wanted to step up homes. What did you need to do before you knew you were ready?
We always put the equity into the new down payment. What city and how much equity do you have?
same market mostly more interior and exterior space
just assume the equity from one will go into the other
so how much other money would be needed
$70k.
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