3 Tips To Help You Budget For A Bigger Family Home
Whether your family is growing, or you feel like your family would benefit from a larger living space, you are not the only one. Recently, more families have chosen to upsize their homes. However, for those families hoping to take the frugal road to home buying, much of your decision to move to a bigger family home hinges on your budgeting plans. Owning a larger home comes with higher costs and more responsibilities. Upsizing to a bigger family home is not just about whether you can initially afford the costs, but whether you and your family can sustain the financial responsibilities that come with owning a larger home. Because of this, it makes sense to get a headstart on budgeting to buy a bigger family home- and the earlier, the better.
Time Your Budget Well If You Need To Sell To Upsize
One of the key financial decisions you will have to make when upsizing is whether you will wait to sell your current home or buy first and then sell. Most recommend selling your current home first since it helps you avoid the burden of paying 2 mortgages at once if you bought first. Selling your current home first also strengthens your financial standing- particularly if you can find a place to stay during the transition while you look for a bigger family home. However, keep in mind that your decision to sell must also be timed to the market. This helps you get the maximum selling price and equity to transfer to your new home.
Increasing the budget
With the increased costs that upsizing can bring, you need to be sure that you can afford those additional costs. Therefore, before you begin looking for a bigger home, it is helpful to note definitive signs you can afford a bigger home. One of those markers is your debt to income ratio- which can be reduced when your income increases or your debt reduces. This is important because chances are that you will need a larger mortgage to finance your family’s next home. A lower debt to income ratio favorably improves the mortgage offers and interest rates you may be offered. This has a direct effect on your monthly budget and just how much house you can afford. If you do have an idea of your upsizing budget and likely interest rate, a home payment calculator can give you an estimate of what your monthly mortgage payments will look like.
Create A Separate Fund For Higher Home Maintenance Costs
A bigger home means more financial commitments. Not only does it often mean a higher purchase price but larger homes also come with higher maintenance costs and other costs of upsizing. Instead of settling on an amount for home maintenance, try calculating the amount needed with average industry percentages. For instance, real estate experts recommend setting aside between 1 and 4 percent of your home’s value for maintenance every year. This also means adjusting your budget for higher maintenance costs, higher mortgage and interest costs (based on a higher principal borrowed), and furnishing a larger family home.
Moving to a larger family home may be a family dream or necessity. However, it does take a bit of budgeting and financial finesse behind the scenes to make it happen. Owning a home- regardless of the size- is a huge lifelong investment. Taking the time to implement some clever budgeting tricks before taking the leap can ensure you give yourself and your family the best possible start in your new home.
