Don't Forget These 3 Added Expenses if You're Upsizing Your Home
by Christy Bieber | Updated July 19, 2021 - First published on April 13, 2021
A higher monthly mortgage payment isn't the only upsizing expense you'll face.
Many homeowners dream of upsizing their property. After all, having a bigger space can seem really attractive -- especially if your current place is feeling a little crowded.
But while a larger home may sound great, remember that upsizing has some big downsides.
In particular, purchasing a larger, costlier property means increasing your costs. And that's not just because you'll probably have to take out a larger mortgage loan. Here are three other major expenses that could take a bigger bite out of your budget.
1. Higher utility costs
A bigger home costs more money to heat and cool. You'll also have more lights, and potentially more appliances, to operate. You may need extra cable hookups, too, or a more expensive internet router so your wifi reaches all of the rooms in your new home.
In other words, you can expect a lot of extra expenses for utilities. The additional costs can add up to hundreds, or even thousands, of dollars that you'll need to work into your monthly budget.
2. Expanded furniture needs
If you want to make the most use of all of your new space, you'll likely have to buy furniture for any additional rooms. You may also need to replace smaller items from your current home with bigger ones that are a better fit in your new space.
This could mean tens of thousands of dollars in expenses when you first move into your new place or soon after. It could also mean spending more down the line to replace items as they get worn out.
3. Higher property taxes
In most parts of the country, property taxes are based on the value of your home. If you buy a more expensive house, you'll pay higher property taxes. The cost increase can be significant, especially if your new home appraises for much more than your old one. And property taxes aren't something you can avoid or put off until later if they don't quite fit into your budget.
Keep in mind all the costs when considering a home upgrade
It may seem easy to afford a larger home when you look at the mortgage payment alone. But you need to think about these additional expenses before you make your decision. You don't want to commit to buying a larger house and then struggle to pay your bills.
Research what your new property taxes and insurance costs are likely to be. A mortgage calculator can help you estimate your projected monthly costs. Rework your budget to accommodate them and practice living on the amount left over.
If you can comfortably cover these new expenses without compromising other financial goals, you're probably ready to upsize. But if you struggle to make your new budget work, think about staying in your current home. It may not make sense to make your financial life harder by taking on these new obligations.
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