Written by Betty White of Moving Offices San Diego
You might be wondering whether you can afford a bigger house with more features than your current home. Well, that might just be the first sign you’re ready for relocation to your new, less humble abode. Unfortunately, that’s not the only sign you’ll need to pay attention to. You’ll need to check if you fit the criteria we’ll show you in the text below. Don’t worry – if now’s not the time, there will come a time you’ll be able to afford something bigger for yourself. Until then, watch out for these little signs you can afford a bigger house. Who knows? You might find out you’re ready for the purchase of a new home.
Is your debt-to-income ratio fairly low?
If your answer is a YES, that might be the sign you can afford a bigger home. Most banks will give you a loan if your debt-to-income ratio is below 43%. If not, that doesn’t mean they won’t give you a cent. It’s just that you’ll have fewer options at hand. If your debt-to-income ratio is higher than the mentioned percentage, then it can be a sign you’re still not ready to purchase a new home. Maybe you’ll need to pay off your car debt instead?
A good credit score is a must
One of the signs you can afford a bigger home is a good credit score. You’re bound to get better mortgage rates. According to experts, a credit score over 800 is considered outstanding, while a little below that is considered very good. Anyway, don’t forget to check your credit score before plunging into the purchase of your new home. Also, don’t forget to check if you’ve got the cash for a down payment. Some folks say this, some folks say that, but a down payment of 20% is not common. Don’t worry! For example, the average down payment for 2020 was about 6%, which really isn’t that high.
A stable income
Well, who could’ve thought of this one? Okay, it probably goes without saying, but having a stable income is undoubtedly one of the ways you can determine you’re ready to buy a bigger home. You’ll need to be sure you’re happy with the current job and that your position is secure in the next five or so years. You’ll also need to pay attention to current (real-estate) market trends and the future of the company you’re currently working for. This seems like a lot to think about, but you know the good old saying – better safe than sorry.
A bigger house in another state?
Some folks dream of a new home in another state. Let’s say you’re from Georgia and you want to move to the neighboring state of Florida. What’s the easiest way to achieve that? There are a couple of ways you can make your move easy and stress-free. The best one is hiring professionals to handle the task, of course. It might seem expensive at first, but it will actually save you money. How’s that possible? With cross-country relocation, it’s always easier to let the pros do all the work. Imagine your belongings get damaged during your DIY move. Who’s going to cover the damage? By hiring pros, your stuff is insured: if something happens to it during transport, you’ll get a nice refund.
Emergency fund, anyone?
Okay, purchasing your new home is one thing. Let’s say you have the funds to cover that part. But, what about the repairs you might need to do in your new place? An emergency fund is a must in that situation. Most folks spend a couple of thousands of dollars every year on home repairs and maintenance, although some find ways to renovate on a really tight budget. Having an emergency fund will make you more suitable for purchasing a bigger house, have no doubts about that.
Do a test run
The title might be a little misleading, but here’s the thing – try to put some money aside each month. How much will it be? Let’s say you’ll have to stash your potential mortgage rate every month. Do it for a couple of months and check out how it affects your life. If you figure out it doesn’t work for you, you can delay purchasing a bigger home. When the experiment’s over, at least you’re going to reward yourself with the money you’ve saved.
Do you depend on selling your current home?
If your new home purchase doesn’t depend on the money you’re going to get from the sale of your current house, it might mean you’re absolutely ready for the purchase of a bigger home. On the other hand – if you depend on the sale of your current home, it’s no biggie. Most people do. Just let your REALTOR® know that you need to sell your currect home in order to buy another home.
A conclusion on signs you can afford a bigger house
So, these were some of the signs you can afford a bigger house. Hopefully, when you’re done reading this, you’ll say: Oh, it looks like I’m ready for a bigger home. Sounds a little bit corny, but who cares? Your new home is just around the corner, waiting for you to occupy it. Unfortunately, we all know how directly finances shape our everyday lives. With a bit of luck and motivation, you can overcome the any roadblocks to the bigger home you have facing you. found ourselves in.