One of the most common mistakes that move-up buyers make is getting too excited about moving to a more valuable home and not setting a proper budget. It’s great to look forward to moving into a new home, but you need to learn what you can afford and then search for homes accordingly. When finding your budget, make sure to consider both the primary and incidental costs of home ownership.
One of the biggest primary costs of home ownership is your mortgage. When you think about your mortgage payment you need to not only look at what your principal and interest will be, but also include your real estate taxes, homeowner's insurance, and mortgage insurance premiums (assuming you don't put down 20%) to give you a truer picture of what your new monthly mortgage payment might be.
Then, you must take into account other costs like HOA dues, home maintenance expenses, and other home upkeep costs. Depending on the size, age, and condition of the home you will upgrade into, the maintenance and upkeep costs could average out to be more each month than what you are currently paying. Think of watering a bigger yard or heating & cooling a home with more square footage. The solution is to know your budget up front so that you can search for a home that you both want and can afford. To help you find the true cost of home ownership you can download our FREE Home Buyer’s Calculator. It is an Excel spreadsheet that will help you find out what all of your monthly expenses will be. Download it today!