Deciding on the discretionary move

Sometimes we don't have much choice about selling our home and buying another. Circumstances, such as a job relocation, may have made that choice for us. However, most often the decision to move is discretionary. Sometimes people move simply because they think it's a good idea. They feel that "now" is the right time to find their next dream home. So how do you make that kind of decision? There are, of course, many reasons to make a discretionary move. Usually, those reasons fall into one of two categories: need and want. You may need to find a new home, for example, because you've outgrown your current property. Perhaps you have a growing family and require more space. Maybe you're doing more entertaining and need a larger backyard with a more spacious deck. It could be that the commute to work is arduous and you need to move to a place that's closer. Those "needs" may motivate you to move, but sometimes a "want" plays an important role, too. For example, you may want to live in a quieter neighbourhood or in a newly built home that requires less maintenance. Maybe you simply want a change. If you're thinking of making a move, take a moment to write down a list of your needs and wants. Seeing them on paper will help make the decision easier. Looking for expert help? Call today.

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How Much of a New Home Can You Afford?

If you’re thinking of shopping for a new home, one of the first considerations is price range. You want to know what you can reasonably afford.

How do you figure that out?

First of all, you need to determine the initial out-of-pocket costs you will need to cover. There are often more costs associated with purchasing a home than its actual price. You need to take into account such additional expenses as moving costs, legal fees, and a home inspection, not to mention the costs of prepping your current property for sale.

Experts say you should budget 5-10% above the purchase price for these items. So if you can afford to spend $470K on a new home, you should be shopping in the $425-445K range.

Another factor to consider are the potential proceeds from the sale of your current home. Your REALTOR® can help you determine how much your property will likely sell for in today’s market. Any existing mortgage will need to be subtracted from that amount to determine how much cash will be left.

Of course, you should speak to a mortgage broker or lender who can compute how much of a mortgage you qualify for. Remember, qualifying for a big mortgage doesn’t necessarily mean you should have one. You also need to consider your personal finances and desired lifestyle – and whether or not having a large mortgage is a good idea for you.

Once you have gathered all of your information, you can add any potential sale proceeds to the amount of mortgage you qualify for, add other sources of cash available for this purpose and subtract 5-10% for initial expenses, and you’ll have an idea of the price range you should be considering.

Finally, it’s important to take the time to decide what kind of home you want. Do you want a large backyard with trees? A quiet, family-oriented neighbourhood? Four bedrooms and a finished basement? Once you decide what you want most in a new home, it becomes much easier to find one that’s in your price range.

Need help deciding how much you can afford when shopping for a new home? Call today.