Why a Bigger House Isn't Always Better
The pandemic has all Americans spending more time in whatever place they call home. With this added time and historically low-interest rates a large number of home buyers are shifting their home buying wishes to larger properties to help make life more comfortable when spending long periods inside.
In most cases, larger homes mean larger purchase prices. It is a big decision to spend a sizeable amount more money, while there are understandable reasons why a bigger home seams more attractive, is a bigger home the better choice in the long run?
Here are some things to consider before buying a bigger home.
What You Can Afford vs. What is Truly Needed
After doing the hard and responsible work of making sure you are as prepared as possible to qualify for a home loan, you go into apply for your loan and discover you are approved for more money than you anticipated. While this can be exciting and even ego-boosting, it does not necessarily mean you should purchase a home at the top end of the mortgage approval amount. Just because the bank will give you that amount of money to borrow does not truly mean you can afford to borrow that much. You don’t want to be stuck paying for your home every month and eating rice and beans while not enjoying life because you can’t afford to pay for anything else.
Before going to apply for a loan take a fine tooth comb to your finances and decide what you can truly comfortably afford. What payment will allow you to still live your life comfortably after making the house payment? This will help you to decide how much home you really need.
The Unthought of Costs in a Bigger Home
Some might call these hidden costs, because a majority of people don’t see them or think about them when making a home purchase. With a bigger home comes a bigger closing cost to finalize the loan, more expense and time to clean it, more maintenance adds up to more money, more land and a higher property value mean more property taxes. Utility bills will cost more as will replacing large amounts of things as they age like flooring.
What is the Resale Value?
If you do not plan to retire in this home, resale value should be considered when purchasing the home. The more expensive a home is the smaller the pool of potential buyers for that home becomes. Take giant estate homes and mansions for example those fancy places that celebrities live in don’t sell overnight because there is a smaller number of people that can afford them.
When looking at a potential resale value look at the history of home sales in that home’s neighborhood. Has it always been a desirable place to live where people are willing to pay a little bit more? Do homes typically sell in a decent amount of time? Does the large home fit into the area it is in? If it is built in the middle of a bunch of townhomes that is going to be harder to resale because the average buyer for that neighborhood is not looking for that type of home.
An expert agent can help you to consider all of these things especially the last one. It is their job to make sure they are as knowledgeable as possible in the condition of the real estate market they work in past, present, and future.
After weighing all the factors you may find that choosing a smaller property may be the better way to go.