Are you trying to determine if it makes sense to move and upgrade your home? If you are going to need mortgage financing, a good place to start is to discuss your specific scenario with a mortgage professional. There are several factors that should be considered.
If you are considering moving, why? Are you looking for more space such as a backyard or a larger home? Do you want to move into a different school district? Outline why you want to move by making specific notes.
Before you decide that a move is right for you, briefly consider if upgrading your existing home makes more sense. The current higher interest rate environment of 2023 makes it much harder to upgrade to a newer/bigger home rather than making a lateral move. Additionally, an unprecedented increase in home values likely means that you have a lot of equity that you can tap into. A Cash-Out Refinance or a HELOC might allow you to make some additions or renovations instead of moving, also potentially allowing you to keep your cost basis lower.
If you do decide that you want to move, the next step is to determine what you want to do with your current home. There are two main options:
(1.) You can turn your current home into a rental property and become a landlord
(2.) You can sell your home and look into using the equity as a down payment for your new purchase.
Generally speaking, selling your current home is the less complicated option and will likely increase your purchasing power the most. If you do decide to keep the previous property with the intent to turn it into a rental, be sure to check with your HOA if they have any additional requirements or documentation needed to ensure the tenancy is valid.
Once you have decided what you want to do with your current home the next step is to determine your overall purchasing power. To do this you will need to determine whether you plan to sell your home before buying a new one, at the same time, or after doing so.
While intuitively it might appear like the best option is to buy and sell at the same time this can be quite complicated so it is important to speak with an experienced real estate agent and mortgage loan originator about what is best for you.
If you’re unsure whether or not you should upgrade to a new property, give us a call at 760-930-0569 and one of our Mortgage Loan Originators would be happy to answer any questions you may have and help you explore your options.