If you’ve been considering selling your current home and moving into a larger or nicer one, you’re in good company. According to a recent survey by Inman, the top motivation for homebuyers today is the desire for more space or an upgraded living environment, with 32% of respondents highlighting this as a key factor. But, as much as people want to make this move, factors like affordability and discretionary spending are making many hesitant to take the leap.  

Affordability is a significant factor when upgrading, particularly with rising costs of owning a home and economic uncertainties affecting many households. For some, taking on a higher monthly mortgage payment or navigating potential interest rate fluctuations can be daunting. As a result, many homeowners are waiting for a more favorable economic climate before pursuing their dream home.  

Leverage Your Equity for a Smoother Transition  

One aspect that could make upgrading more feasible is the equity you’ve likely built up in your current home over the past few years. Even amid market fluctuations, home prices have generally risen, increasing the average homeowner’s equity. According to Selma Hepp, Chief Economist at CoreLogic:  

“Persistent home price growth has continued to fuel home equity gains for existing homeowners who now average about $315,000 in equity and almost $129,000 more than at the onset of the pandemic.”  

This built-up equity can provide a cushion, helping you manage the cost of an upgrade. It can be used to increase your down payment on your next home, which might help keep your new mortgage within a more comfortable range. Even with current affordability challenges, leveraging equity could make upgrading more realistic than it seems.  

Falling Mortgage Rates Offer More Flexibility  

Another factor that might help make upgrading more achievable is the recent decline in mortgage rates. As interest rates fall, monthly payments become more manageable, potentially easing some of the budgetary concerns associated with buying a larger home. Nadia Evangelou from the National Association of Realtors notes:  

“When mortgage rates fall, the interest portion of monthly payments decreases, which lowers the total payment. This makes it easier for more borrowers to . . . qualify for mortgages that may have been unaffordable at higher rates.”  

While it’s true that market conditions are more favorable than they were a year ago, the decision to upgrade should still be carefully weighed against your overall budget and financial priorities. Lower rates might allow you to afford more than before, but it’s crucial to ensure that any increased spending aligns with your discretionary budget.  

If you’re contemplating a move to a bigger or upgraded home, affordability and discretionary spending are key factors to consider. While lower mortgage rates and increased equity provide opportunities, it’s important to balance these benefits with your budget and financial goals.  

The best approach is to consult with a real estate professional who can offer insights tailored to your situation, from understanding your equity position to exploring mortgage options that fit within your financial comfort zone. Whether you decide to upgrade now or hold off, having a plan can help you feel confident in your decision.