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Ever thought about what happens if you found your perfect property, looked at the price, only to realize that you are coming short on your borrowing capacity? Sounds disheartening, right?

After all, borrowing capacity is often considered a key factor when buying a home. Your borrowing capacity affects how much you can spend off on a property, thereafter, determining your home loan.

When you swap your existing mortgage for a new, larger mortgage, borrowing against your home equity, it is called a cash-out refinance. You can borrow more than you currently owe. The funds are released to you directly, and you can use them to fulfill any of your financial needs – from paying a high-rate debt to purchasing a new car. However, to use cash-out refinance as a way to refinance a home loan, you must have equity built up on your home.

Upgrading to a bigger property often comes with heaps of paper works and involves a far complicated process than buying your first home. As a first home buyer, all you would be looking forward to is buying a new home, but upgrading a property involves both your existing home and the new one you would want to buy. This being said, upgrading to a bigger property requires the transaction of two properties usually within a single timeframe.

Selling your home can be arduous and time-consuming, especially if it's your first time. And with the added emotional value the place holds for you, your judgment can get clouded. While it is common to want to sell the house for what you think is worth or more, it is also crucial to keep realistic expectations. And for that, reliable information and being prepared is the key. The whole process can run a lot simpler with a bit of know-how ranging from the ins to the outs of the local real estate market.