You can afford to trade homes
Your desire to sell your current house and buy another one may be driven by a force as frivolous as sheer boredom. But if you can afford to sell and buy again, and you know what you’re getting into, why not?Now, defining afford is important. Afford means that you’ve identified your personal and financial goals and you’ve calculated that the cost of trading houses won’t compromise those goals.
Everyone has unique goals, but if you’re like most people, you probably don’t want to spend the rest of your life working full time. To retire or semi-retire, you’re going to need to save quite a bit of money during your working years. If you haven’t yet crunched any numbers to see where you stand in terms of retirement saving, postpone major real estate decisions until you explore your financial future.
You need to move for your job
Some people find that at particular points in their lives they need to move to take advantage of a career opportunity. For example, if you want to be involved with technology companies, certain regions of the country offer far greater opportunities than others.When you lack employment, paying bills is difficult, especially the costs involved in home ownership. If you’ve lost your job or your employer demands that you relocate to keep your job, you may feel a real need to move, especially in a sluggish economy.
Moving for a better job (or simply for a job) is a fine thing to do. However, some people fool themselves into believing that a higher-paying job or a move to an area with lower housing costs will put them on an easier financial street. You must consider all the costs of living in a new area versus your current area before deciding that moving to a new community is financially wise.
You also should consider that you may be overlooking opportunities right in your own backyard. Just because your employer offers you a better job to get you to relocate doesn’t mean you can’t bargain for a promotion and stay put geographically. Likewise, during an economic slowdown, if your employer says you must relocate or face downsizing, explore other employment options in your area, especially if you want to stay in the local area.You’re having (or will have) financial trouble
Sometimes, people fall on difficult financial times because of an unexpected event. Check out these two scenarios:- After Ryan graduated from college, he landed a good marketing job and seemed financially secure. So, he bought a home. After a few years in the home, Ryan discovered that he had a chronic medical problem.
Ultimately, Ryan decided to go into a lower-stress job and work part time. As a result, his income significantly decreased while his medical expenses increased. He no longer could afford his home. It made sense for Ryan to sell his house and move into lower-cost housing that better addressed his reduced mobility.
- When Teri and her husband bought a home, they were both holding down high-paying jobs. Unfortunately, their marriage had problems. After much marital counseling and many attempts to get their marriage on a better track, Teri and her husband divorced. Because neither of them alone could afford the costs of the house, Teri and her husband needed to sell.
Selling your house and moving to a lower-cost housing option may be just what the financial doctor ordered. On the other hand, if you can bring your spending under control and pay off those consumer debts, maybe you can afford to remain in your present home. Be sure you’re being honest with yourself and realistic about your ability to accomplish your goals given your continuing housing expenses.
You’re retiring
If you decide to call it quits on the full-time working life, you may find yourself with more house than you need or you may want to move to a less costly area. Instead of trading up, you may consider trading down.You can free up some of the cash you’ve tied up in your current house and use that money to help finance your retirement by moving to a less expensive home. If you’re otherwise happy where you’re currently living, don’t think you must trade down to a less expensive home simply to tap the equity in your current property. You can tap your home’s equity through other methods, such as taking out a reverse mortgage.
Your house is associated with bad feelings
As with other financial decisions, choosing to sell or buy a home isn’t only about money. Human emotions and memories can be just as powerful and just as real factors to consider.If your spouse or child has passed away, you divorced, or your house was badly burglarized, the property may be a constant source of bad feelings. Although selling your house and moving won’t make your troubles go away, being in a new home in a different area or neighborhood may help you get on with your life and not dwell excessively on your recent unpleasant experiences. Just be sure to temper your emotions with a realistic look at your financial situation.