Should I Move?

How to know when it’s time for a new home? 

If you are looking around your first home wondering “Should I Move?” you are in the right place!

When you bought your home, it fit your life at the time. But after living in it for a while, you are seeing how it doesn’t have what you need anymore and you are completely running out of space for your ever-expanding life! The house that once fit your lifestyle is now filled with new people, pets, hobbies, or even your workspace! Leaving you looking around and asking, “Should I move?”

 If you’re selling your home for the very first time this will be a new and different experience, than buying for the first time.  You are no longer looking for a starter home but rather a place you can grow and expand in. With the first home under your belt, you have a better idea of what does and doesn’t work for you in a home.

As a first-time seller, you not only need to sell your current home and buy a new one, you need to time it all just right, so you don’t end up with no home or two homes for too long! We truly understand how nerve-wracking it can be to decide if it’s really the right choice to sell and buy or just stay and update the home you already have. 

So, If you are considering something bigger and better, or maybe just a change of scenery… let’s get down to the nitty-gritty before YOU rush out and start buying all your packing supplies! 

Let’s start by asking ourselves “What isn’t it working” and what’s making you say “Should I Move?” 

Once you know the WHY you can quickly determine if moving is the best option for you or if you can stay put in your current home with a few minor updates. Sometimes making updates to your current home, like adding a second bathroom might be possible and save you the stress of moving altogether. 

Many times though, things that are no longer working like your tiny yard with your 2 large dogs, cannot be easily changed. Things like a home’s location, the size of the home, maybe the lot is too small for the needed bedroom addition, or adding on a garage. 

Remember, you never want to remodel and be the most expensive home on the block. You might not get your money back out of your upgrades because buyers can buy into your neighborhood into a similar-sized home for much less than your over-improved house. For example, spending thousands to update the flooring in your home to hardwood floors when everyone in the neighborhood has laminate and carpeted floors may be too much.

Sometimes it just doesn’t make financial sense to spend the money for major updates to your home and it would be better to put the money you would have spent on updates towards your next home.

Does it make financial sense to move? Understanding your financial situation will help you to determine if you’re ready to sell your home and buy the next.

One of our clients bought her first home when she was single, she ended up getting married, got a couple of dogs, had a baby, and her 2 bedroom 1 bath home was now too small. They wanted to move to a bigger and better home so they could grow their family. But after looking at homes in the area they wanted to move to they determined that they couldn’t afford that area with their current budget. We suggested they take a pause from looking at houses and focus on paying off debt, come up with additional funds, and take a job opportunity that allowed for a bigger income. After taking a small pause and working through our suggestions they were able to purchase a home that was perfect for them!

Here are the top 3 financial questions to ask yourself to decide if it makes financial sense for you to move.  

1. How much is your home worth and how much do you still owe on it? 

Owning your home for at least 3+ years seems to be the sweet spot when building equity in your home. The first couple years of your mortgage you are paying mostly interest, after that you start to pay down the principal of your loan.

If you have enough equity in your current home it should allow you to pay off your current mortgage, cover the expenses of selling your home, and provide enough money to purchase your next home.  Like your down payment and closing costs.

The good news is the housing market has changed considerably over the past few years and homes have seen double-digit appreciation. The downside is that interest rates have risen and most likely will never be as low as they were post Covid. 

What does this mean for you as a seller? The double-digit appreciation means your home is possibly worth 10%+ more than when you bought it. You want to net the most money for your home with the equity you built so when you go to buy your next home you will have more money to put down. That will help compensate for the higher interest rates, giving you a more affordable monthly payment. 

2. Can you afford a higher monthly mortgage payment?

Moving up to a better, larger home many times equals a higher monthly mortgage payment. 

Are you ready to pay more monthly for the school district you want or the home you’ve been dreaming of with additional acreage to get you out of the city? 

Make sure you know what the housing prices are in the area you are looking to move to.  Sometimes we have dreams of moving to a great neighborhood for only a little more than we are paying now.

Realistically the area you want to move to is very important, for example in the spring of 2023 the average home in Rockford is $450,000, Lowell is $397,000, Grand Rapids is $268,000, and further out Ionia is $195,000 (Ionia is still an easy commute to Grand Rapids).

3. How is your financial fitness looking?

Yes, even our personal finances need to be kept in tip-top shape especially if you are thinking of moving. You will need to speak with a lender about getting pre-approved for a mortgage if you decide to move.

• When talking with a lender they will ask you questions such as: do you have steady employment? Meaning have you changed jobs recently? Have you changed from a salaried employee to a commission-based pay, or are you now self-employed?

• Also, did you recently change the field that you’re working in? Lenders will want to see a minimum of two years of experience when changing a career path.  Changes like these can make a difference in how or when you can get approved for your next mortgage.  

• What’s the current state of your debt? A lender will calculate your current debts and compare them to your current income coming up with a debt-to-income ratio. They will look at your monthly expenses including credit card debt, car loans, and student loans. So, make sure to keep your debt as low as possible. This will help you qualify for a better mortgage.

• You also want to make sure you’re making your monthly payments on time and keeping your credit score in tip-top shape. The higher your credit score the better mortgage rate you will qualify for and that can save you thousands over the life of your mortgage.

So now that you have figured out your “why”, you know if it makes financial sense, and if you are financially ready. You should be able to answer your burning question “Should I move”? If the answer is yes, and now you are wondering how? Check out our blog post next week where we unlock the mystery of “Buy First or Sell First? The Financial Dilemma”.