Owning a home can be one of the best long-term investments that someone can make. While many people may live in their homes for decades, there are plenty of life circumstances and situations that would require someone to upgrade to a larger home. While moving into a larger home can be a great option for a growing family, it does come with more expenses that need to be taken into consideration. There are several steps that someone should take to ensure they are financially prepared for the larger home.
Larger Down Payment
One of the best things that you can do to reduce your monthly payment on a larger home is to have a larger down payment. Ideally, you should have a down payment of at least 20% of the purchase price as this will result in qualifying for the lowest possible rates and avoiding paying PMI (Private Mortgage Insurance). Some great ways to get a larger down payment would be to save more money or find ways to sell your current home for a higher price. The excess sales proceeds can then be rolled into your next property.
When building your budget, you should also factor in other costs as well. When you have a larger home, you will undoubtedly incur higher utility bills, insurance costs, and maintenance expenses. All of these costs need to be incorporated into your financial budget when you are budgeting for your next property.
Cut Back on Spending
If you are concerned about the higher monthly payments, you should find ways to cut back on your monthly spending. It would be a good idea to carefully track all of your spending for at least a few months to get a better idea of where all your money is going. You can then find ways to reduce your spending, which will free up additional cash flow for a higher mortgage payment.
If you have any questions, feel free to give us a call, we’d love to clarify and answer any questions.