I’ve been getting a lot of feedback from my earlier posts, where I dissect the housing recovery assertions and respond that the ‘move up’ market is missing, thereby causing a lack of available homes for first time homebuyers and a glut of high-end homes with few available move-up buyers. Just to recap, a move-up buyer would be a current homeowner looking to sell their current home and ‘trade-up’ for better home. Here are some direct answers, compliments of the National Association of Realtors.
These questions will help you decide whether you’re ready for a home that’s larger or in a more desirable location. If you answer yes to most of the questions, it’s a sign that you may be ready to move.
1. Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.
2. Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.
3. Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job or live in a better school district.
4. Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.
5. Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.
6. Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.
Items number 5 and 6 and especially important in today’s market. Interest rates are low, and despite inflationary pressures should remain low for a bit longer. Number 5 is a harder answer, especially if buying a new home is contingent upon selling the old one. You will need to find a seller willing to let you buy based on the contingency, and then market and price your current home to sell, since the old housing market ain’t what it used to be. It’s not an impossiblilty, but both buyer and seller will need to be flexible, competitive and willing to compromise. If you are able to buy a new home without selling the old, then your options are a little better. You can lease out the old property until you fell comfortable selling, or you can sell it at your convenience given the buying the new home is not contingent upon the sale. In this scenario (given you feel positive about your income and ability to afford more home), moving up is a clear possiblity and may very well make sense for you.
For this and more stuff on buying or selling, visit www.JosephCapote.com. Really, my website analytics reports are so incredibly depressing. And my bounce rate would make Magic Johnson proud. Click the link… You know you want to!
Filed under: Buyer's Blog, Seller's Blog, home buyers, home sellers, moving up, real estate
Joe Capote 