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Can You Afford to Move Out? These 5 Steps Will Help You Decide

At HomeLight, our vision is a world where every real estate transaction is simple, certain, and satisfying. Therefore, we promote strict editorial integrity in each of our posts.

Selling your house might seem like a good idea, but can you afford to move out? Thousands of families struggle with this question every year, mainly because they know moving can be complicated and expensive.

How expensive? According to numbers from Angie’s List and the American Moving & Storage Association, the average cost of an intrastate move is $1,170, while the average move across states costs $5,630. And keep in mind, that figure doesn’t include the costs of marketing your home for sale or closing the deal.

Our 5 Step Process Will Help You Figure Out if You Can Afford to Move

The purpose of this guide is to help you decide whether a move is affordable – or even feasible – in your case. Can you afford to sell your home and move somewhere else?

To help you out, we’ve boiled the calculation down to 5 simple steps. Before you decide whether to sell your home, here’s what you have to do:

  1. Figure out your current expenses.
  2. Estimate your new expenses.
  3. Estimate the costs of selling your home and physically moving all of your stuff from one house to the next.
  4. Take a close look at your savings.
  5. Make an informed decision.

Let’s dig into the details of each step and figure out, once and for all, if you can afford to move out.

Step 1: Figure out your current expenses.

Before you decide whether you can afford to move, you need to figure out your baseline housing expenses. This number should include your current housing payment with property tax and insurance, utility bills, and all other housing expenses you have.

From here on out, we’re going to use a couple – Jim and Betty – as an example. Jim and Betty own a 2,000 sq. ft. home worth $180,000 and have a monthly payment of $1,200. The current balance on their mortgage is approximately $110,000.

Here’s what Jim and Betty’s baseline expenses might look like:

  • Mortgage Payment (including P&I): $1,200
  • Utility Bills (estimated): $300
  • Trash Pickup: $30
  • Lawn Service: $50

In total, Jim and Betty are forking over around $1,580 to live in their current home. Not bad, huh?

To figure out whether you can afford to move, you should determine how your expenses stack up during a normal month. Once you figure out your baseline housing expenses, you can move on to the next step.

Pro Tip: When you’re estimating your current living expenses, don’t forget to consider work-related costs. If you’re commuting an hour to work each day, for example, you may want to include gas and time in your baseline living expenses.

a photo of a person calculating their expenses to see if they can afford to move out
Source: (Mackenzie Freemire / Death to the Stock Photo)

Step 2: Estimate your new expenses.

Since you’re already thinking of selling your home, you probably have a good idea of where you want to move. Before you can determine affordability, you should crunch some numbers to reach a baseline for your new housing costs. This cost of living calculator from Bankrate can help.

If you’re buying a new home, you’ll need to estimate your new mortgage payment including your new interest rate, new property taxes, and new homeowner’s insurance. Keep in mind that, depending on where you move, these expenses can vary dramatically.

Example: Jim and Betty’s old mortgage payment was $1,200. That amount included $100 per month ($1,200 per year) in homeowner’s insurance and $200 per month ($2,400 per year) in property taxes. Their 15-year home loan was at 3.75% APR.
Jim and Betty have their eye on a new house with a $200,000 price tag, although they plan to use $50,000 profit from their home’s sale as a down payment.

The payment on their home might look like this if they opt for a 15-year loan:

  1. Mortgage principal and interest: $1,110 per month
  2. New homeowner’s insurance: $100 per month ($1,200 per year)
  3. New Property Taxes: $250 per month ($3,000 per year)

New Housing Payment: $1,460 per month

In addition to this amount, Jim and Betty need to consider other housing costs such as anticipated utility bills, lawn care, trash pickup, security systems, etc. In this case, Jim and Betty expect similar utility bills and plan to take care of the lawn themselves.

As you work through your new expenses, make sure to be realistic about how much your new living situation will cost.

Playing around with a mortgage calculator can help you determine how much your new housing payment might be.

Meanwhile, you can get a good idea of potential property taxes and insurance rates by calling an insurance agent in your area for a preliminary quote and checking your new home’s MLS sheet for property tax information. An MLS sheet is a document that shares all of the up-to-date sales data for any particular home. While you may be able to find MLS data for any particular home using your state’s MLS listing website, you can also get this type of data from your Realtor.

Other questions to ask yourself include:

  • Do you have a new job lined up?
  • If so, how much does it pay?
  • Will you pay more for health insurance or medical care?
  • Will other monthly bills (cable, telephone, groceries, etc.) cost more or less?

Make sure to look for hidden expenses (or hidden savings) resulting from your move. If you plan to move closer to work, for example, you might save money on your commute. If you’re moving to a lower cost (or higher cost) neighborhood, you could spend more or less for property taxes, lawn care, trash pickup, and insurance.

Pro Tip: “Look before you leap,” says CPA/Realtor Trina Larson of Berkshire Hathaway Home Services / Pen Fed Reality. “Compare the economy where you are vs. where you are going. Consider state income tax rates, property values, real estate taxes, vehicle taxes, and the price of consumables. Look at the other job opportunities available in the event things don’t turn out as planned. “

a photo of a person writing their expenses to find out if they can afford to move out
Source: (Ray Kay / Death to the Stock Photo)

Step 3: Estimate the costs of selling your home and moving.

Selling your home isn’t cheap, and that’s especially true if you use a Realtor’s services. You might be tempted to skip the Realtor and market your home yourself, but that plan has drawbacks, too.

While hiring a Realtor can cost 3-6% of the sale price of your home, a professional Realtor can help you recoup those costs with a higher sales price. In fact, the typical FSBO home sold for $210,000, compared to $249,000 for agent-assisted home sales in 2013 according to the Profile of Home Buyers and Sellers. Not only can a Realtor help you fetch a higher sales price, but they will also help you market your home and facilitate all paperwork for the sale.

On top of Realtor expenses, you’ll need to pay for:

  • Closing costs on your old home
  • Moving costs out of your old home
  • Costs related to your moving into your new place

Moving costs can vary depending on how far you’re moving and how much work you can do yourself. Make sure to call around for quotes from local movers before you estimate this highly variable expense.

Example: For Jim and Betty, the cost of hiring a Realtor for their home works out to $10,800 if they pay 6% and sell for $180,000. On top of that amount, the pair plans to spend around $1,000 hiring professional movers and another $500 on new curtains and accessories for their home.

They also set aside $4,000 in closing costs for the sale of their home. This money will be used to pay:

  • Transfer fees and recording fees
  • Title insurance fees
  • Attorney Fees
  • Unpaid HOA dues
  • Prorated property taxes
  • Prorated mortgage interest
  • Settlement fee

While closing costs can vary dramatically, $4,000 is an estimate of what Jim and Betty might need to bring to the closing table. Obviously, you’ll need an estimate of your own closing costs before you can figure out what you can afford.

With that being said, Jim & Betty’s moving expenses look like this:

  1. Realtor fees: $10,800
  2. Movers: $1,000
  3. New home accessories: $500
  4. Closing costs: $4,000

Grand Total: $16,300

a photo of a person carrying a bag out of their house to move out
Source: (Allie Lehman / Death to the Stock Photo)

Pro Tip: If your moving company charges by the hour, ask how many men? How many hours? “Try to negotiate a max,” says Larson. You can also consider packing your own belongings to cut down on paid moving hours. “The packers provided by moving companies generally do a good job but their service is expensive,” she says.

Step 4: Take a close look at your savings.

While some of the larger expenses resulting from a move can be paid out of profits made at closing, many costs need to be paid upfront. As you figure out your next steps, consider the expenses you’ll need to fork over before you sell your home and compare them to your savings. Do you have enough money to cover them?

Potential expenses to take care of before your move include:

  • Deposits for your new utilities (or apartment if you plan to rent)
  • Repairs on your home so you can sell
  • Home upgrades to score a higher sales price
  • Mover’s fees paid upfront
  • Earnest money deposits on your new home

Pro Tip: “Don’t forget the costs of buying or renting when you arrive at your new location,” says Larson. Make sure to plan for deposits and purchasing household goods, new furniture, blinds, shower accessories, curtains and more (if applicable).

a man carries boxes from his car to save money as he moves out
Source: (Alex Tan / Death to the Stock Photo)

Step 5: Make your decision.

By now, you’ve come up with a wide range of important details to consider. You should know:

  • Your current living expenses
  • Your potential expenses after you move
  • Moving costs and Realtor fees
  • Whether you have the cash to cover the upfront costs of moving

Now that you have a clear picture of where you’re at, you can decide whether you can afford to move – and if you should.

Example: In Jim and Betty’s case, they have less than $20,000 in anticipated moving expenses to plan for. But they also expect a $70,000 profit from the sale of their home. Even if they sold their home for less than they expect, they would still be okay. And because their new house payment will only be marginally higher than what it is now, they don’t anticipate having a problem with their new mortgage payment.

But you’re not Jim and Betty, are you? To determine whether you can afford to move, you need to see how your numbers stack up. As you move through the process, remember to be as realistic and level-headed as you can. Determine that selling isn’t in the cards right now? Consider renting out your home instead.

Jim & Betty’s  Moving Expenses Your Expenses
Realtor Fees $10,800
Hiring Movers $1,000
New Home Accessories $500
Closing Costs $4,000
Potential Home Repairs  $0
Deposits for New Utilities  $0
Earnest Money Deposits for New Home  $0
Time Off Work  $0
Other Miscellaneous Expenses  $0
Grand Total: $16,300

Header Image Source: (Alex Tan / Death to the Stock Photo)