Are you currently living in the house of your dreams? Is your neighborhood the one you want to be in? For many people, the answer to these questions is no, and often the thing that holds people back from deciding to upgrade their current home is the cost of a new home. While it’s always important to evaluate your current financial situation before you make any decision to upgrade to a larger home or a better neighborhood, there are some potentially overlooked financial advantages to taking the leap sooner than later.
<h2><strong>Evaluating Your Financial Situation</strong></h2>
Upgrading to a larger home or a more expensive living area is going to come with an increase in your total monthly payments, and there is pretty much no way to get around that (unless you have a big pot of money you’re just looking to spend and can put a huge down payment on the new home). Because of that, it’s important that you take a critical look at your finances and talk to a lender about the cost of the new home to make sure you can afford it. If you are able to upgrade without impacting your overall budget, there can be some significant financial advantages to an upgrade.
<h2><strong>Freeing Up Cash for Your New Home</strong></h2>
Perhaps one of the top reasons that homeowners look at upgrading their home as an option is the impact it can have on cash flow. For many families, monthly credit and other debt obligations can make it difficult to afford a better home, and often these monthly bills are paying for depreciating assets or consumer debt, such as vehicles, boats, ATVs, and revolving credit accounts. These debt payments can prevent you from investing in other things that are likely to increase in value over time, such as a home or retirement account.
For homeowners who currently have equity in their home, selling your home could free up enough cash for you to pay down your other debts and finally be able to afford the upgraded home that you have always dreamed about. If you decide to go this route, though, it’s important that you avoid falling back into significant debt after you purchase a new home.
<h2><strong>Playing the Long Game</strong></h2>
While many people talk about real estate as an investment, and count it as an “asset” when analyzing your financial situation, it’s important to note that while you live in the home, and until the mortgage loan is paid off, there are still expenses associated with this investment. Even calculating the total net cost of an upgrade, weighing the increased monthly mortgage payment against the principal reduction, appreciation, and tax savings, and the projected future value, means approaching your financial gains as something you can achieve several years (even decades) from now, rather than an immediate cash benefit.
It’s important to consider all the relevant factors, and honestly assess your personal financial situation before deciding whether a move is the right choice for you. If it is, talk to <a href=”https://citycreekmortgage.com/”>City Creek Mortgage</a> about getting the best mortgage loan terms and rates.