How to Determine if You Can Afford to Move

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The moving industry generates revenue based on the economic principle of supply and demand. Many people need help to move and will pay for moving services.

As you consider moving, you will eventually need to create a moving budget. This budget will include information about the financial needs of your current home, costs associated with moving, and expenses that you incur after moving into your new home. Preparing your budget is important, but you should also first understand the financial logistics of moving.

Determining what is affordable

Before you move, you'll have to determine what type of home you can afford. You will need to closely examine your finances and understand how your finances will be evaluated. If you are preparing to buy or rent a home, make sure to do the following:
  • Maintain a stable job. Work motivates a lot of people to move. If you are seeking employment before you move, you'll want to find a job in an economically stable area. Make sure to check the U.S. Labor Department for current statistics regarding unemployment rates by state.
  • Check your credit. There are credit reporting services, like Freecreditreport.com, that can provide you with your credit score. This score will be checked by mortgage lenders, banks, and others as an indication of your financial health. Your credit score will play a major part in determining the amount of money you receive from lenders, as well as your monthly mortgage interest rate.
  • Prepare for a down payment. Whether you are renting or buying, a down payment is typically required. If you are renting an apartment, it is standard to pay a month and a half of rent as a down payment. If you are obtaining a mortgage, the cost will vary, but be prepared to offer 10-20 percent of the total asking price.
  • Create a budget. You will need to create a budget to itemize your current expenses, moving expenses, and immediate fees that will be due on the day of your move.
  • Plan your search. Determine the type of home that you're looking for and where you want to move. This will help you determine your most realistic housing options.
  • Consider your financial goals. Don't go for broke to purchase a new home. It is common for many people to stretch their budget, but you want to make sure you can reduce and eliminate debt within a reasonable amount of time. If you are renting, look for leases that won't obligate you to more terms and conditions than you can reasonably commit to. If you are buying, make sure to locate mortgage payment options that will greatly reduce your payments each year.
Moving to an affordable home requires that you are financially stable and prepared. For first-time home buyers, there are online calculators that will assess your income and debt obligations. The assessment will be based on your down payment amount, annual homeowner's insurance, terms of your new mortgage, interest rates on your new mortgage, and estimated annual property taxes.

TIP: If you want to buy your home and need a mortgage lender, then that lender will be looking at your:
  • Credit card debt
  • Auto loans
  • Child support
  • Potential property tax
  • Insurance
  • Credit rating

Paying for home improvements

 
Home repairs are unavoidable, especially if you are thinking about moving. All the avant-garde paintings that you hung on your walls not only have to be removed, but the holes repainted.

Your real estate agent advises you that in order for your home to sell, you have to replace the kitchen cabinets and appliances. Upgrading and replacing items in your home can be expensive. The best method of payment for home improvements is cash, home equity loans, contractor financing, and credit cards.


If you want to move sometime in the future, then the best option is to keep saving. Having a savings account will help you budget better for your move. Your savings account can also function as an emergency fund for any unexpected moving costs.

Moving is a multi-faceted process. It can be complex, but having a realistic understanding of how moving into a new home will impact your finances will make you better prepared for relocation. Creating a financial plan for the future will make you more confident about your move and the new investment worthwhile.

Author :

on August 27, 2009

Movers.com - Moving Expert
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