Don’t jump into upgrading your home until you’re sure it’s the best choice.
- Upgrading a home is a big financial decision.
- A bigger home comes with added costs.
- There are a few important questions to ask yourself before upgrading.
Buying a bigger home is a major financial decision. Not only will you need to commit to larger mortgage payments, but you’ll face other additional costs as well, including higher property taxes, more repair and maintenance expenses, and higher utility payments.
Before you decide that upsizing is really the best choice for you, ask yourself these key questions to see if your decision to get a bigger place really makes sense.
1. Are you prepared for the financial consequences
In most cases, you will have to take out a larger mortgage to purchase a bigger home. The bigger the mortgage, the higher the monthly payments. As mentioned above, your utility payments, property taxes, and maintenance expenses will likely also go up since you’ll have more property to heat and maintain.
When you purchase a larger and costlier property, you’ll also need a larger amount of money in order to meet the minimum 20% down payment requirement necessary to avoid having to pay for mortgage insurance. And if you get stuck paying for this insurance — which lenders require on small down payment loans to protect them against loss in case of foreclosure — the costs of the premiums will be higher. Closing costs are likely going to be more expensive as well.
The upfront and ongoing costs can add up to thousands of dollars extra every year. You need to make absolutely certain this fits comfortably in your budget without compromising other crucial financial goals such as saving for retirement.
2. Are you ready to take on more upkeep?
Taking care of a larger house doesn’t just require more money — it also requires more time. You’ll have more space to clean, and potentially more lawn to mow. And you may also have more repairs and maintenance to tackle, especially if you have multi-zone heating so you have two separate units or if you add bathrooms or fancy new kitchen appliances.
Consider whether you want to spend this added time taking care of your home — or have the money to pay …….