Knowing whether you should move or not isn’t always a simple calculation. You think you can afford the new mortgage, but it’s often hard to tell unless you go through all the nitty-gritty details.
The costs of moving are considerable. Just hiring a removal company to take your possessions from one state to another could wind up costing more than $5,000.
In this post, we chart some of the steps that you can take to find out whether you can afford to move home or not.
Here’s what to do.
Estimate Your Expenses At Your Current Location
Figuring out whether you can afford to move first involves estimating how much money you’re spending every month. You need a baseline figure to work out how far your current income will stretch if you decide to move soon.
Try breaking down your bills into sections. Fill in the blanks in the following list:
- Mortgage expenses
- Utility bills
- Property taxes
- Additional essential fees
Once you’ve populated the list, you’ll have a sense of what your outgoings are right now and how much leeway you have in your income. If you can cover your bills then you can seriously consider moving out, according to thebalance.com.
Estimate Your Expenses At The New Location
The next step is to figure out what you’ll wind up paying if you bite the bullet and actually decide to move.
Go through the above process again, but take into consideration the features of the new property. If it’s bigger than where you live now, the mortgage, taxes, and utility bills will likely be higher.
Working out your future expenses requires some intuition plus using calculator tools, like those on Pigly.Com. Try to find out how much more your mortgage is likely to cost. And estimate how much extra water and electricity you’ll need at your next address.
Eventually, you should be able to derive a new list of expenses and compare them to what you’re likely to earn. If costs are higher than your salary, you’ll need to rethink. If not, then, so far, so good.
Work Out How Much Moving And Selling Will Cost
Selling your property is expensive. You’ll need to set aside between 3 and 6 percent of your home’s value for realtor fees. And you’ll also have to put additional money aside for various closing costs.
For most families, additional costs sum to around $4,000 and include title insurance fees, attorney fees, unpaid HOA dues, prorated mortgage interest and property taxes, and settlement fees.
Don’t forget; you’re also likely going to have to spend a few thousand dollars more on home accessories once you reach your new location. So you’ll need to consider these too.
Make A Decision
Once you have a clear picture of your financial situation, you’re able to decide whether you can afford to move.
Remember, you need two things:
- Enough money to cover the costs of the transaction
- Sufficient income to cover the full costs of owning the new home
Going into a transaction without both of these in place can lead to significant financial difficulties down the road. It could even make moving into your new property impossible.