As we transition away from 2020 into the light of the new year, many are considering a move-up from their starter homes. Realtor.com predicts that there will be a housing boom in the spring and summer of 2021, meaning now is a very good time to sell your starter home and look for an upgrade. With many Millennials and Gen Z’ers looking to leave cities for more suburban and rural areas due to working remotely, there will be plenty of demand in 2021. If you are thinking of capitalizing on this upcoming wave of demand, now is the time to start preparing for your move-up.
Here are ways you can prepare for moving up from your starter home.
1. Define what you are looking for in a new home
Why are you looking for a new home? Do you need more space for future children, ageing parents, or children returning to the nest? Are you looking to enter a better school district or take advantage of different taxes in a different area? Would you like to be closer to your family or work? Are there new needs that your current house simply cannot meet? All of these questions are important to consider when thinking about vacating your existing abode for an upgrade.
2. Understand the finances
To spend money you have to make or have money. If you have gotten a promotion in the past few years, a pay raise, or the value of your home has increased, these are all good signs for your financial future when upgrading. It is paramount to consider your current home’s worth versus what you are willing to spend for your new home and what kind of assistance you may need. If you need a mortgage you will want to set yourself up for financial success by making sure you have done what you can to be an attractive option such as improving your credit score, debt to income ratio, and ability to make at least a 20% down payment. Looking into ways to save for a down payment and planning your future budget will all be important factors that will affect what kind of upgrade you can afford.
3. Selling your home and buying your new home
Do you buy before you sell or sell before you buy? Luckily here at American Eagle Mortgage, we can help you with both of these options. Our Listing Enhancement Loan program will help you make improvements on the home you want to sell before you put it on the market, that way it will sell for even more. Whether you need to update appliances, fix the roof, or improve the landscaping, the Listing Enhancement Loan can help prepare your home for sale. If you are thinking of buying your next home before you sell your current one, the Bridge Loan program is the one for you. This loan will help if you want to transition smoothly from your first home to your next home. Utilize the Bridge Loan to pay for your next home’s down payment, pay off your current home’s mortgage, or have an edge against others looking to buy the next home you want. If looking for temporary housing sounds like a tedious task, consider the Bridge Loan program today by seeing if you are qualified.
4. Is this the Home for You?
So, you’ve found a house that you really like, but will it serve what you need and want? Return to the list you made for why you are moving up to a new home and ask yourself, “Does this home satisfy the needs and wants that my current home doesn’t?” If it doesn’t then maybe this isn’t the home for you… or you need to reevaluate your list of needs and wants.
Another important item to consider is your timeline. Even though we hope this next home will be your forever home, it is also good to think about it as an investment. That means considering the resale value, market appreciation for the area, and any improvements you may need to make to the house to make sure you make a profit when you sell. By planning to stay in your home for a few years, you will raise the likelihood that your house appreciates in value. Leaving too early may mean a net loss overall.
Finally, the most important factor to set you up for a happy and successful life in your new home is making sure you can afford this new place. If the answer is no, make sure to go back to the drawing board to readjust your needs and wants to fit your budget.
Now that you have all the tools, you are ready to go to start looking for your next home. If you are considering upgrading to a new home then make sure to talk to one of our Loan Advisors about mortgages and financial planning. They can also tell you about our Listing Enhancement Loan and Bridge Loan programs.