Removing Barriers for Move-Up Buyers
There’s a lot of information out there for move-up home buyers, but if you’re thinking about moving up into a bigger or better home, it’s hard to find information that’s specific to you. People seem to assume that after you’ve gone through the home buying process once, you’re an expert.
We know that move-up buyers face their own unique challenges, particularly when purchasing a new construction home, and we wanted to take some time to address some of the issues you may have when it comes to buying a home that’s a better fit for your current lifestyle.
The Down Payment Dilemma
It can take around a year to build a new home, and this presents a challenge for those who currently have a home. You need to make a down payment long before you’ll be able to move in, so you can’t just sell the home you’re living in and use the profits. One way to get around this is to take out a home equity line of credit HELOC using the equity in your home. You can borrow this money at a relatively low interest rate, then pay it all back immediately once you are able to sell your home.
It’s also important to remember that you don’t need to have a 20 percent down payment on your new home. Given the cost of a large home, that 20 percent could be a figure that starts to approach six figures. It’s easy to see how that’s intimidating to many families. Sure, 20 percent might be the best amount to have because it allows you to avoid mortgage insurance premiums, but you don’t have to have that much.
Carrying Two Mortgages
Another problem that move-up buyers face when buying new construction is the prospect of carrying two mortgages at the same time. You’ll have to start making payments on the new home before you move in, but since the funding usually comes in stages, you may not be paying the full amount of the new mortgage. A lender who specializes in new construction can help you understand what payments will look like for your unique financial situation. You may find that it’s a lot easier to make both payments than you thought, especially when you focus on the fact that it’s only temporary.
Alternatively, you could look into purchasing a quick possession home. These are brand-new homes that are already built. You get all of the benefits of owning a new home, but the process of purchasing the home is much like that of buying a resale home. There’s a shorter turnaround, so you can sell your current home right away.
Higher Mortgage Payments
There’s a good chance that your dream home is more expensive than the home you’re currently living in. This means a bigger monthly mortgage payment. However, most people have had income gains over the years that they’ve been in their homes. Some people even find that the energy efficiency of their new home makes it even easier than they had thought.
You also have to remember that when you’re building a home, you’re able to control the payment. Doing things like selecting cost-effective materials or decreasing the size of the home can have a big effect on the cost. Talk to an Area Manager about how you can get the home you want at a price you can afford.
You had the credit score you needed to purchase your first home, but maybe you’ve had some credit slip-ups along the way. Maybe you’ve forgotten a payment here and there or had to run up a credit card when you were out of work. This decreased your score to a point where you no longer qualify for the best rates.
No worries. Your credit score is one of the easiest things to fix. Simply focus on paying down your debt and make sure that you always make every payment on time. Gradually, your score will increase, and you’ll be able to buy the home you want.
Understanding the New Home Buying Process
You’re probably already familiar with the resale buying process. You tour available homes for sale; you likely have to compromise on some of your needs or wants due to what’s out there; you haggle for a good price, and then you have to hire an inspector and hope that there are no major problems with the home. Sometimes, you win, but sometimes you lose.
Buying a new home is a completely different process than buying a resale home. You have to look at different builders and different communities to find what’s right for you. You can get almost anything you want in a home… but you also have to balance that with the need for a price you can afford. Being asked to make selections for every little detail can start to feel a bit tedious. At the same time, all of the extra work is worth it. You can also feel more confident buying a brand-new home over a resale because in Alberta every new home comes with a great warranty!
When it comes to selling your current home, Sterling has an amazing Listing program to help you get your home moving as quickly as possible. There’s a great selection of services to choose from, so contact an Area Manager today to find the one that’s perfect for you!
You deserve to live in a home that perfectly meets your needs, and that’s what you get when you move into a new home. Come tour our show homes today to see what your life could look like.