This isn’t your first rodeo. You’ve been through the home-buying process before, and now you’re ready to up-size and upgrade your lifestyle. Congratulations! Just because you’ve purchased a house before doesn’t mean you’re up to date on what’s changed legally and with the market since the last time you went house shopping. Here are some things to consider before you make the leap into your new life of luxury.
Work out your finances. You have some big decisions to make. Do you sell your current house outright and move into temporary rental housing until you’re ready to buy again? Do you keep your current house and rent it out for extra income? Do you shop for houses contingent on the sale of your current property? Before you can move into a new house, you’ve got to figure out what you’re doing with your current property. In most cases, the current house is sold, either outright while the buyer lives in temporary housing, or during the process of buying the new house. If you choose to rent the house, you need to make sure your rental income is enough to cover not only the mortgage, but also any repairs and maintenance that might be needed over time.
Regardless of what you decide to do with your current house, you will still need to seek pre-approval for your new home mortgage loan, which will help in securing offers you make on future properties, and can help you estimate your home-buying budget. Investigate interests rates and changes in real estate law, and don’t be afraid to shop various lenders. Your current lender may be your go-to lender because you’ve already established a rapport with them, and a payment history, but this could be an opportunity to build a relationship with a new lender with better rates. But during this process, don’t make any major changes in employment, and don’t make any big-ticket purchases that could jeopardize your debt to income ratio. And you’ll still need cash on hand for good faith deposit or earnest money, down payments, closing costs, etc.
You’ll need to work with a qualified, professional real estate agent who can help you list your current house while also aiding you with finding your next house, if you’ve decided to sell. Your real estate agent will help you prepare before the house is listed for sale.
Know what you’re looking for in your new house. Now that you’re experienced as a homeowner, you know what you like and what you don’t like; what worked and what needs changed, and you know where you need more room, whether that’s in a larger yard, more bedrooms, or both.
Your real estate agent will help you price your current house for sale. The price you ask for your current house should be comparable to what other houses in your neighborhood, similar to yours in size and features, have recently sold for. You won’t necessarily get as much in the sale of your house as you did when you purchased, so be prepared to accept your home’s current value. Then again, sometimes the home value increases, so you may get more than you’d anticipated. Either way, you have to price the house to sell, especially if your new house is contingent on the sale of this one.
Stage your house for sale. This involves cleaning, simplifying, depersonalizing, and arranging furniture and décor in such a way that its inviting to potential buyers.
When offers come in on your current home, consider the timeline. If your new home purchase is contingent on the sale of your current house, you’ll need to align your move out date from your current house with your move in date of your next house. If the dates don’t align, you may find yourself in temporary housing between the time your current house sells and your new house is out of escrow.
Up-sizing and upgrading your lifestyle can be a wonderful experience, if you go in prepared. Seek pre-approval, work with a professional real estate agent, know what you’re doing with your current property, know your goals in up-sizing, and prepare in advance with your savings and your plan. Then, enjoy the process of growing into your new space.
We want to make your move-up as stress free as possible. Give us a call today at 951-515-8931.