Moving Up: Dream House or Money Pit?

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Moving Up: Dream House or Money Pit?

There are several benefits to buying a bigger house. Perhaps you need more room because your family is expanding, you need a home office since the Covid-19 epidemic made it essential for many people to have one, or you want extra outdoor gathering area. Even if larger houses are not always more affordable for purchasers, you should be ready financially if you want to buy one.

Additionally, a bigger house may cost as much for individuals who don’t mind a smaller home’s reduced square footage but still want luxurious features like a pool, eco-friendly outside area, and a high-end kitchen. Perhaps during the last ten years, the “McMansion” has lost some of its appeal. Luxury real estate is still in demand, but it also carries higher mortgage payments, utility costs, taxes, and other costs.

Key Takeaways

  • A bigger house requires more time and money, which are two important considerations.
  • A pool’s landscaping and upkeep may be quite costly.
  • Smaller may still be pricey if you purchase a contemporary house with several luxurious modifications on a large piece of land. Bigger isn’t always better.
  • You could be prepared to invest in a bigger property if you budgeted for greater costs and accepted them for six months.
  • Larger homes often have greater monthly mortgage payments because of larger house loans.

Managing a Bigger Mortgage

Large mortgages, which may cost you several thousand dollars a month depending on the home, also often accompany large homes. Additionally, it will cost more to heat and cool a larger room. If you prepare for the additional costs, you won’t be surprised.

There are many additional elements to take into consideration in addition to the mortgage size and utility costs, which you are likely to think about before moving. They may be divided into two groups: time and money. These subcategories are interwoven heavily.

The Time Commitment of Upkeep When You Upsize

The size of your new house immediately affects both the obligations and the amount of time needed to handle them. What at first appeared like a wonderful idea might quickly turn into a burden. The Covid-19 outbreak and the quarantine regulations that followed it led to an increase in demand for outdoor space and amenities, which resulted in a reinvention of fantastic eco-friendly and well-designed yards, swimming pools, kitchen gardens, trees, and firepits. These extras may be quite expensive, and maintaining the land that a house is built on will cost money.

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Without assistance, you can discover that your leisure time is taken up with yard work and house upkeep tasks. If you require help, it may come as a shock to learn that high-end lawn care equipment upkeep, from tractors to snowblowers, may cost you several hundred dollars, plus the cost of hiring someone to do the service. The upkeep cost might be comparable to a mortgage if you include luxuries like a hot tub, pool, outdoor kitchen, sod, and some artistic masonry for a patio.

McMansions, typically with multiple garages, mix styles on a too-small lot. Photo by Karen Hatch/Moment Mobile Collection/Getty Images

Don’t Forget the Garage

Take a quick glance at the garage—or more specifically, what’s in it—before you head inside to relax and figure out how to pay all of your new assistants. A contemporary garage that has been renovated has posh storage spaces, special oil-resistant flooring, and even flat-screen TVs.

Additionally, you may convert one of your garage areas into a living room, an entertainment area, or even a home office if your house has two or more of them—substantial houses often have. Depending on the design and amenities, upgrading them into usable space beyond storing your vehicle might cost you tens of thousands or even hundreds of thousands of dollars.

Taxes on a large, brand-new home may be comparable to a mortgage payment on a smaller home.

Hiring Help

Maintaining the appearance of your new house takes a lot of time and work. You could decide that you’ve had enough after doing all the home cleaning, lawn mowing, and snow removal. But assistance is expensive. For instance, according to Indeed, housecleaners make an average wage of $16.29 per hour, with certain regions and localities paying even more. A laborer who maintains a lawn may charge $15 per hour, while maintaining a pool might run $80 to $150 per month.

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Repair Work

As the property matures, the direct expenses of time and money also apply. According to the size of the property, maintenance and repairs are necessary. A big home’s replacement roof will cost more than a small one. A big home’s new carpeting may potentially cost in the tens of thousands of dollars. Stone and stucco repairs may significantly deplete practically any budget. A big kitchen redesign will cost more than a modest kitchen remodel. A big bathroom renovation costs more than a small bathroom renovation, and so on.

Test Drive a New Budget

It’s time to develop a “new” home budget now that you’re including the moving expenses. Even though it could seem like a lot of work, this is just a financially responsible strategy. Live with the costs of a pricey new house for six months to a year before making the purchase. Spend your money as necessary (you can park the cash temporarily in your moving fund).Check to see whether you have enough money left over to feel secure. The significance of really knowing your money will be reinforced by this practice.

Should I Buy a Bigger House?

You shouldn’t always buy a larger apartment if you think you need more room. Moving furniture about in your present home or turning an attic, cellar, or even your garage into living space may sometimes provide more room. Adding to your present house might be less costly than buying a new, bigger one, depending on the style of renovation you choose. Make sure your finances are in order and you can manage the higher monthly payments if you want to purchase a larger home.

How Do I Know If I Can Afford a Larger Home?

This question can only be answered by you. You may be able to determine how much more of a mortgage you can comfortably afford by looking at your debt-to-income ratio. Don’t forget to include other expenses like upkeep and property taxes.

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Is Buying a Bigger Home a Better Investment?

Larger homes often come with higher mortgage and property tax costs than smaller, fixer-upper homes. The answer to the issue of whether or not it is a decent return on investment relies on a number of variables, including the status of the housing market when you want to sell, where your property is situated, and how much equity you can build up while you live in it.

What Is a McMansion?

The phrase “McMansion” refers to a huge, often extravagant, mass-produced builder’s home. When the COVID-19 epidemic struck the United States in March 2020, people started looking for greater space both inside and outdoors, and McMansions and other similarly sized homes with swimming pools, fire pits, and expansive decks saw a resurgence in popularity.

The Bottom Line

Being ready for the increased expenditures and modifications to your budget when you decide to move to a bigger house or a mid-sized new home with updated amenities on a large lot is essential to avoid becoming house poor, overburdened with care and upkeep, or both. You could be prepared to relocate if you carefully consider how much it will cost, make a plan, and save money for a year to test your new budget.

If all goes according to plan, your future may include greater inside space, more amenities, a greener house tucked away in the woods with a deck, pool, and lovely fire pit on the patio.

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