Things to consider when buying a larger home
Some people reach a point when they need to think bigger. Having a family or planning one means you’ll need to be prepared to accommodate everyone and live comfortably.
Upsizing your home is a process that requires some planning. The goal is to have a larger home, which has many advantages, but some considerations must be made before you start the process.
It’s more expensive
The most important aspect to consider when buying a larger home is the price. Upsizing means you’ll probably go over the average price, so you’ll need to consider your mortgage options.
States like Arizona and many others have an average price similar to the nationwide one, around $400 thousand. With that said, there are cities where those averages increase significantly. To put that into perspective, the average home price in Scottsdale is over double, surpassing $800 thousand. This is where you’ll need to consider your mortgage options.
Conventional mortgages aren’t made for these kinds of prices, which is where a jumbo loan comes into play. With most lenders, needing more than around $700 thousand qualifies you for these kinds of loans. It means you’ll need to look at jumbo loans in Scottsdale if you’re planning to get a large home in The West’s Most Western Town.
You should keep in mind that a larger mortgage means a larger monthly payment. You can mitigate this by going for a larger down payment, which can help you lower the price and interest rates a bit. That said, you should expect to pay more, regardless of how much you try to reduce the payments.
Furnishing and renovating will cost more
Getting a new home often means you’ll get an empty place that may need some renovating. A smaller one will be cheaper to furnish and renovate than a larger one, and the reasons are obvious.
The more rooms your new home has, the more items you’ll need to purchase for them. It’s a similar story with any potential renovation projects. A larger home has more surface areas on the walls or floor, it may have multiple bathrooms, bigger kitchen etc., all of which increase the renovation expenses.
One option is to get an already furnished and renovated home, which will spare you the hassle of doing it yourself. With that said, you should consider that those kinds of homes are more expensive, so you’re adding expense to an already high mortgage payment.
Higher utility bills
Another expense increase when getting a larger home is the utility bill. Some people argue that if the number of family members remains the same, the bills shouldn’t change. Unfortunately, that’s not the case.
The most noticeable difference should be with the electricity or gas bill. Heating or cooling a larger home means there’s more area, meaning the bill will be higher. The rest of the utility bills may not change all that much, but you may see a slight increase.
Higher property taxes
If you know anything about taxes, you’ll know that they’re calculated by the area of the home or its value. This means whenever you decide to get a bigger home, you should expect to pay more in taxes.
They vary from one state to another, and you’ll often see different rates in different regions and cities. To get the most accurate calculation, you’ll need to contact local authorities or conduct research.
Higher insurance rates
Insuring your home is essential, so you’ll want to insure your new, larger home as soon as you get it. Similar to the taxes, the size and value of the home mean you can expect to have higher insurance rates.
With that aside, insuring specific items means you’ll need to pay more as well. A larger home opens up room for adding more items, some of which may be of greater value. Insuring those adds to the expense, meaning that at the end of the day, you’ll pay more when compared to your old smaller home.
Bigger isn’t always better
Accommodating a larger family is one thing, but getting too carried away is another. The main reason for getting a larger home is to accommodate your family, but in many cases, people go overboard and get much larger homes than needed.
Sure, having a large office or a study room may look nice, but is it practical and useful, or is it just for show? Whenever you decide to go for a larger home, first, you’ll need to consider how much larger you need it to be. It’s important to balance big enough and functional enough.
Many homeowners reach a point where they need to get a bigger home. Upsizing is a good way to move into a more comfortable place, but there are several things to consider. With the increased expenses aside, you should also ask yourself: how much larger do you need your home to be?
