- What are your total transaction costs on the sale AND the purchase
- What are the holding costs on the new home
- Will you have to pay a capital gains tax on the sale of your current home
- What are the moving costs
- If you will be using your equity from the sale of your home to purchase the new home without a mortgage, how will losing the interest deduction affect your personal taxes
- Will you need to store any of your belongings
- Be sure to factor in your health care costs & inflation in your new location
- It’s MUCH easier to accomplish a down sizing in your 50s & 60s than in your 70s & 80s
- What repairs & delayed maintenance will be necessary of your current home to bring it to move-in condition
- Can you afford the repairs & potential staging costs
- If you will be purchasing your new home before your old home is sold can you afford the overlapping holding costs
- Don’t waive a home inspection if you are buying a new build
- Can you afford the inflation on home services in your new neighborhood
- Will you regret getting rid of your “stuff”
- You’re going to get decision fatigue
- Will you have seller’s remorse
- Make sure you’re not down sizing too small – you don’t want to have to move twice
- If you are moving to a completly new area, consider renting before buying
Property taxes, hazard insurance and HOA fees are all increasing and up to 65% of homeowners with mortgages have “escrow shortages” — many were qualified at higher percentages of their income. In my opinion, I would not originate a mortgage (principal and interest) at more than 20-22% of my income because of it. With escrow shortages, your lender keeps the money on a monthly basis that was your old escrow PLUS the amount needed for your new escrow to meet ongoing payments. The average shortage in escrow balances was $2,157.00!!! Property taxes have increased by approximately 15% between 2019 and 2024 (Cotality.) Property insurance has increased approximately 70% between 2019 and 2025, says the Dallas Fed (March.)
This insurance issue is enough on its own to force some homeowners into falling behind on mortgage payments because they cannot move/downsize or otherwise lower their costs.
