For a lot of homebuyers, your first home will not be your last. Starter homes are great for getting into the real estate game and giving you something to build upon. But over time, your needs will change, and what was once a more than sizeable living space will start to feel cramped and inadequate. That’s when you’ll know that it’s time to think about upsizing to a larger home. But while this can make for an exciting time, know that there are many pitfalls to avoid as you make this transition. Any home purchase requires careful planning, and that’s no different when upsizing.
Watch out for these five mistakes as you get ready to embark on your next home buying adventure.
Mistake No. 1: Rushing into a new purchase without understanding the current marketMistake No. 1: Rushing into a new purchase without understanding the current market
When you first start considering upsizing, it can be easy to get caught up in a rush of excitement about the prospect. You start dreaming about all that new space and how a change of address could radically change your life. But while enthusiasm is a good thing to have when entering the market, it’s also important to do a reality check and understand what you’ll be getting into. The market may or may not be favorable towards buyers, and you’ll need to get a handle on what the current home values are for the type of home you’re interested in. A buyer’s agent can help you with all of this by walking through market analyses and performing price comps. You won’t want to pay more than you should or can reasonably afford.
So, take a breather and go about this both slowly and methodically. You don’t know yet whether it’s even a realistic option to upsize just yet, so study the market and see what prices homes are going for right now.
Mistake No. 2: Miscalculating your space needsMistake No. 2: Miscalculating your space needs
How much extra space do you really need? It’s important to be realistic about this and not get suckered into focusing on homes that are larger (and more expansive) than your needs require. Take an assessment of your current home and decide what’s needed and what can be improved. Maybe you’ve been using a section of your living room as a home office and want a dedicated home office space. Would you like a spare bedroom for housing visiting in-laws and other relatives? Decide if it’s essential and worth the extra expense. Just as you know, there are things you absolutely need more space for; there’ll also be things you can do without.
Also, once you’ve moved into your new home, please don’t rush to fill up all its spaces with new furniture. It may take a while to get used to your new surroundings and decide how best to use them. Focus on the practical needs first for an everyday living before thinking about setups for special occasions.
Mistake No. 3: Ignoring long-term factorsMistake No. 3: Ignoring long-term factors
Are you looking for a forever home you can retire in or is this new purchase just another step towards that golden year’s home? Think about this carefully, as it can be hard to look that far ahead in your life if it’s still a long way off. At the very least, you should try to look 10-15 years ahead and imagine how your life circumstances might change again. Chances are, you won’t want to go through another purchase in the future, so think about your needs both now and then.
It’s also worth thinking about the added responsibilities that come with a larger home. There’ll be more maintenance, higher utility bills, and a larger home insurance premium to pay once you’ve moved in. Make sure you understand what that will mean so you can budget accordingly. It’s rarely worth the effort of buying a larger home if you have to spend most of your income on it. Avoid ending up house-poor.
Mistake No. 4: Disregarding financingMistake No. 4: Disregarding financing
It’s easy to spend hours looking at online listings and dreaming of your new home. But a far more unpleasant task that many hopeful buyers try to avoid is the question of mortgage financing. What can you actually qualify for and afford? Leaving this till last can mean a lot of wasted time looking at listings and open houses that you could never have afforded in the first place. Face the music now and see what kind of loan you can actually qualify for. Besides, getting a mortgage pre-approval letter before your home search can make a big difference when it comes time to make an offer.
Find out what financing options are available to you and what kind of interest rate you stand to get since you’re no longer a first-time buyer that immediately disqualifies you from many programs available to new buyers. Fortunately, you may be in a better financial condition now than you were for your first home purchase. All that equity you’ve built up can make for a powerful asset if you choose to sell to fund the purchase of your new home.
Mistake No. 5: Neglecting your current homeMistake No. 5: Neglecting your current home
You may have your eyes almost entirely on your new home purchase, but don’t forget about your current home. The home buying process can take anywhere from a few months to a year or more. In that time, you’ll still need to keep up with maintenance and other upkeep costs on your current property. If you’re planning to sell, then the home will have to be kept in top condition so you can capture its peak value. It may even be a good idea to invest a little bit in your current home so that it’s ready for the market. A few simple renovation projects can make a big difference and lead to a much faster sale.
The process of buying and selling simultaneously can also be an audacious one, with many pitfalls to avoid. Make sure you understand how this process works and have a few backup plans if something goes wrong. Navigating the difficult process of buying and selling simultaneously is just one more thing that having a qualified buyer’s agent can help you with.