Suze Orman: How to Ultimately Afford Your Dream Home
Add to that the commission to the broker who sells the old place and the closing costs on the new one, and you're talking serious outlay. And don't forget moving costs, or the fact that a more expensive house means higher property taxes and insurance. Not so dreamy after all, eh?
So before you make the open-house rounds, sit down right where you are and consider what you have. Do you really need a new house—or would the problem be solved by a beautifully redone bathroom or an extra bedroom for guests? Renovating rather than relocating can be the smarter financial move, with one caveat: Don't go too far beyond the neighborhood's basic level, upgrading to the point where you have a Taj Mahal bursting its boundaries on a block of ranch-house subdivisions.
The rule still applies. Go for what you want, but don't go overboard. Find your practical dream.