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Expanding Your Space: Deciding When to Buy a New House

Posted by South Dakota Housing Authority on Jan 14, 2016 10:54:55 AM


There comes a point in time in which your starter home begins to feel a little small. Whether it’s an expanding family, the desire to move to a new neighborhood or city or just a general itch to spread out, moving to a new house might be on your agenda. 

Can you afford it?

This should come as no surprise – a larger home means higher expenses. Make sure your budget can handle the larger mortgage payment that comes with an upgraded house. And this includes the amount of taxes you pay, which will change depending on where you move to and the value of the house you buy.

And it goes beyond just your monthly house payment – a larger house means more cleaning and maintenance, from larger yards to mow and rake to more pavement to shovel in the winter. And speaking of winter, the bigger the house, the higher the utility bills – it’ll likely cost a bit more to keep your house heated and air-conditioned.

Finally, there are some unique scenarios that may apply to you – if you buy a condo, for example, you may have to pay homeowners association fees. And if you need to build higher-cost mortgage payments into your monthly budget, you may have to cut back on luxuries, like going out to eat, traveling and nice-to-haves.


What’s changed?

This isn’t your first rodeo – you’ve purchased a house before, so you know your way around the homebuying process. But time has likely passed, and your financial situation probably has changed since then.

For starters, is your income different? If you’re making more or less money than the last time you bought a house, it’ll affect what type of property you can afford. In the same vein, if your debt level has changed, this will also affect how much mortgage you’ll be able to secure from your lender.

Lastly, if your credit score has changed, this will play a role in securing funds for your home purchase. Different types of mortgages have different requirements for minimum credit scores.


Are you ready to sell your house?

Last time you were in the market, you may have been a first-time homebuyer, which means that there is one crucial difference on your second go-around – selling your current house. There are a few key things to think about when it comes to putting your house on the market.

 Do you own your house outright? Namely, have you paid off your mortgage completely? This will affect how much seed money you have for your new house’s downpayment and closing costs. If you can turn a profit, you’ll have more funds with which to work in your buying process.

And what has changed about your house since you first bought it – has your home increased in value? This will affect your selling price. But that’s not the only factor in your selling price – what is the housing market like in your area? Your real estate professional will be able to give you a sense of what similar homes are going for in your neighborhood.

Your plan of attack for moving will also play a role in how you sell your house. If your house sells before you close on your new house, do you have temporary living space lined up? And in case your new house closes before you sell your current one, are you prepared to handle two mortgage payments at once?


These are just the tip of the iceberg in terms of being a second-time homebuyermake sure you pick the most ideal time to expand your living space.

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E-Book Download A South Dakotan's Guide to Buying Your First Home Vol. 1