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If you want to buy a more costly property, such a move is known in the real estate business as trading up. Doing an honest assessment of whether you can really afford to trade up is imperative. Based upon your income and down payment, the lender and agent can tell you the most that you can spend. They can’t tell you what you can afford to spend and still accomplish your other financial and personal goals.

One of the biggest mistakes that trade-up home buyers make is overextending themselves with debt to get into a more expensive property. The resulting impact on their budgets can be severe — no money may be left over for retirement savings, for educational expenses, or simply for having fun. In the worst cases, people have ended up losing their homes to foreclosure and bankruptcy when they were hit with unexpected events, such as job losses or the deaths of spouses who had inadequate insurance.

Before you buy your next home, get a handle on what you can really afford to spend on a home. Unless your income or assets have increased significantly since the time that you purchased your last home, you probably can’t afford a significantly more expensive property. The most important issue for people to consider is how spending more money each month on a home will affect their ability to save for retirement.