Is it a Good Time To Sell Your Home?
The most asked question that Tanne and I get is “Should I sell my home now?”. The answer that we give is “It Depends”. Contrary to the negative real estate news inundating us daily there is good news and let me illustrate it with an example.
Your family has outgrown your 3 bedroom 2 bath home. Your home will sell now for $250,000 down 10% from what it would have sold 2 years ago. You have a 30 year fixed mortgage at 6.25% for $220,000.You can afford a $350,000 home and can get a $315,000 30 year mortgage for 5.00%. The best news on the sale of your home is that with the $8000 First Time Homebuyer Tax Credit there are more potential buyers for your home than there have been in the past five years. The low interest rates and the Tax Credit together have created a sense of urgency to buy unseen in many years.
Now let’s work the numbers to see if a sale and move-up buy makes sense for you. If you sell your home for $250,000 now you have foregone the 10% gain you had two years ago or $25,000. On the buy side the new home is also devalued 10% or $35,000. That gives you a net “gain” of $10,000 in relative value. Your current monthly mortgage payment (principle and interest) is $1354.58. With the lower interest rate for your new mortgage your new payment will be $1690.99, a monthly increase of $336.41.
Is this a good deal? Individual homeowners must look at their financial situations and make a determination based on their wants and their needs. What is clear, however, is that even in the current down market there are advantages to homeowners who want to sell and move up. Before you rule out selling—especially if there are compelling reasons to sell– do the math, consult a Real Estate Professional and make an informed, rational decision based on your situation not on the real estate market in general.