Moving Up

Tips for potential move-up buyers

If your family is growing, you're earning more money than you were five years ago, you want to live in a more desirable area, or you want a larger or better-appointed house, you might be considering selling your house and "moving up."
Many homeowners are also motivated to move up because of increasing appreciation rates; they can sell their existing house and have a hefty down payment for their new house.
There are many things you should consider when moving up:
1. Keep your options open. With prices continuing to rise and inventory low in many areas of the country, you're likely to encounter a depleted inventory at high prices. If you wanted something fairly new, think about something a few years older. "Many 'older' homes have been refurnished, turning them into desirable properties for either new or move-up buyers.

2. Get an accurate picture of your financial situation. How much more of a mortgage payment can you really afford? Just because a bank approves you for a certain amount, it doesn't automatically mean you should spend that much on a house. Factor in other debts and expenses and long and short-term savings goals like college for the children and retirement for you. Lenders generally say your mortgage should be about 25 percent of your gross monthly income. And always factor in some reserve savings to put aside each month.

3. Be realistic about how much you can sell your house for and how much of the proceeds you'll have available for a down payment on your next house. Ask a real estate agent for a market analysis. And don't forget closing costs -- points, which are extra fees paid to secure a lower interest rate, origination fees, taxes, title insurance, and financing costs. The higher your down payment, the lower your monthly mortgage payment and the possibility of qualifying for a better loan.

4. Get a pre-approved loan. This way you'll know if you can get approved and how much you can spend on a house. It also puts you in a stronger position when you ultimately making an offer on a house.

5. Be specific about your needs and don't cater to emotion. If you have two children with another on the way, be on the lookout for houses with plenty of bedrooms and areas to entertain and raise growing children. Take play and study spaces into account.

6. Consider the area as well as the individual house. If you have children, check out the reputation of the schools that your children would be attending. Contact the local police to get an idea about crime activity in the area. And factor in the area’s proximity to work, shopping, restaurants, and other important places you'll be frequenting.

7. If you're considering an existing house, check out the property's insurance history. This could affect your ability to obtain insurance if you buy it. Begin by making sure your credit report is accurate -- credit histories are sometimes used to determine whether a company will insure you, and, if so, at what rate. Also, the Insurance Information Institute says you should get a copy of your property history report. If you have not filed any insurance claims in the past five years, you won't have a history report. The better your report, the better chance you'll have of obtaining reasonably-priced insurance on the house you buy. Ask the seller to provide a copy of their history report, too.

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