Whether you’re anticipating a new addition to the family or just feel your current home is bursting at the seams, realizing you need more space raises many questions to consider as a family. Options can include buying a bigger house, renting a larger space, or adding on to your existing home.“Currently, the market in Texas is so hot that selling your home and moving up in the market is your best bet, dollar for dollar,” says Paula Thompson, a real estate agent with Keller-Williams Realty in Lubbock.“It’s completely a seller’s market, so you can get a good price on the home you’re selling; and with interest rates being so low, it’s a good time to take out a mortgage.”If you decide to sell your home, Thompson says you’ll need to invest some time and money in it before putting it on the market. “Don’t go overboard, but neutralize the paint so there aren’t any shocking colors. And put in some new carpeting, even if it’s just basic and inexpensive. Fresh paint and new carpeting can cover a lot of odors you didn’t even know you had — and it makes the home look fresh and updated.” She also recommends having a home inspection done before putting it on the market. This can forewarn you of repairs you might need to make before selling the house.The True Cost of Home Buying:While you work to sell your existing home, you should identify what you want from your new home. That includes looking at the real cost of owning a larger house.“One of the most important things for people to remember is that they’re going to have to pay closing costs,” Thompson says. “A lot of times, they think about the down payment, but not the closing costs—which can be $6,000 or $7,000 on a $300,000 home.”Additionally, larger homes often come with larger water and electric bills and higher maintenance costs. If you’re moving into an area with a homeowners association, there will likely be fees. All of these expenses should be factored into the buying decision.“People need to approach buying a home like they do buying a car,” reminds Paul A. Pustka, a Texas Farm Bureau Insurance agency manager in Shelby County. “Before they buy a new home, they need to find out how it’s going to affect their insurance payment.” Oftentimes, he says, the additional cost of insurance is an afterthought, and people are surprised to learn how much it affects the bottom line. He says it can cost as much as three times the amount they are currently paying — and that’s a budget hit that most people aren’t prepared for.“Before you give serious consideration to buying a home, you really need to find out what the cost of insurance will be and see how that is going to affect you,” he recommends.Three issues that directly affect the cost of insurance are location, fire protection, and construction. If you move from within city limits — where the fire department can quickly respond to your emergency — and trade in a brick home with a metal roof for a log cabin, your insurance rates will increase. Knowing how your rate will be affected and factoring that into the purchase price is a great way to avoid sticker shock.Pustka says that your Texas Farm Bureau Insurance Agent can do a quick internet search of the property you’re interested in purchasing and almost immediately tell you what the insurance rate would be. He suggests narrowing down choices and getting quotes on the properties before making a final decision.Beyond Buying:Of course, buying a new home isn’t the right answer for everyone.For example, if you love your current home but need more room, or if you are fond of your neighborhood, staying put may be your best option. For families, moving to a different area can mean changing schools — and that’s a big consideration for parents.“If someone is happy with where they live, I would suggest that they call a contractor and see what it would cost to add on to the home,” Thompson suggests. Although you may plan on staying in that home for many years, she says to make sure your addition is appropriate for the area to ensure resale value down the road. You may dream of adding a second story to your home, but if all the other houses in your neighborhood are ranches, consider expanding outward instead of upward.“Multigenerational homes are popular, so adding an apartment with a walkway leading to it could be a good investment,” she says. “Look at the trends in your neighborhood to get an idea of what will fit in.”Before you start building, though, make sure your insurance coverage is adequate. Pustka says your agent can write a short- term builder’s risk policy to cover the addition or remodel during the construction phase. This policy protects the addition from major perils such as fire, lightning, windstorm, hurricane, or hail. Once the home is completed and occupied, that short-term policy will be canceled and coverage will be adjusted to reflect the addition on your homeowners policy.Short-Term Solutions:One alternative to the long-term commitment of buying a bigger home is to rent. Thompson says if the need for a larger home is temporary — such as two years or less — renting could provide a better option.Of course, you’ll want to consider the same things you look for in a home you’d buy, such as a safe neighborhood, necessary amenities, and creature comforts like proper lighting and water pressure within the home. Remember, in most cases you won’t be able to make changes to the property, so make sure the paint, flooring, and layout are all to your liking.“Make sure you know who is responsible for things like taking care of the lawn. And if you have any questions, don’t just verbally take the landlord’s word for it — make sure he shows you where it’s written in the lease,” Thompson says. Then, protect your belongings with renter’s insurance. “Renter’s insurance is very important and very inexpensive,” Pustka says. “Lots of things can happen that you don’t expect, and you want to make sure you are protected.”Talk with your Texas Farm Bureau Insurance Agent about adjusting your coverage to meet your growing needs.Coverage and discounts are subject to qualifications and policy terms and may vary by situation. ¬© 2015 Texas Farm Bureau Insurance
