If you're on the buying side of the housing market, then you're in luck. Elements such as the improving job market, historically low interest rates, and overall affordability have made it a great time to be a buyer. A lot of individuals with a steady, good paying job and an expanding family are asking themselves whether or not it's time to step up the housing ladder to a bigger and better home. If you find yourself asking this question, then you might want to answer a few more questions before making a decision:
1. How are my finances? Stepping up the housing ladder could mean that you'll be making a commitment toward higher monthly mortgage payments, property taxes, and utility bills. There are also the fees, service charges, down payment, and other costs associated with the buying process to take into consideration. If you've been able to save an emergency fund large enough to last you at least eight to nine months, keep your credit in order, and you feel confident that your job is secure and steady, then you're a good candidate to step-up the housing ladder.
2. How will my energy consumption change? A larger living space often equates to more energy consumption and, as mentioned above, higher utility bills. Energy consumption might be offset to some degree if a potential new home meets green standards, such as by having energy efficient appliances, windows, and insulation. Your local power company should be able to provide an estimate on the average cost per year for the property you're considering purchasing.
3. Do I have equity? A lot of buyers find that they can use any cash equity built into their current home to help them step up the housing ladder. Since such housing trends are highly personalized to the area and homes, take the time to research your local housing market. You might find that your neighborhood has retained healthy home values, even if a nearby neighborhood has experienced dramatic home value declines. You can use a recent appraisal of your home and the comparables in your area to get a good idea of how much equity you have.
4. Are the housing trends favorable? Considering the economic climate of your particular area, you also need to ask yourself if you feel comfortable buying a new home. Your real estate agent can provide you with info on local market trends and address any concerns or questions you might have. For example, you might want to know if local home values will hold steady and what the buyer to seller ratio is for the area.
5. How will moving impact household members? A home's space can quickly become limited with the addition of children or aging parents. Although stepping up the housing ladder can save the sanity of a cramped growing family, it could also mean that household members move further away from family, friends, work, school, regular babysitters, and so forth. The move might or might not be worth it.
Buyers should keep in mind that home values might not have hit bottom yet. That said, stepping up might be a good fit for financially sound buyers looking to make a long-term investment in their ideal home.