Crunch the Numbers Before Making a Decision to Sell Your Home

Selling a home to move up to a larger home – or a smaller home – is typical in the real estate industry. People move up to larger homes when they start a family, or when their income increases, and people downsize to smaller homes when the kids go off to college or when they separate or have other life changes. Before you decide to sell a home and move up or down, though, crunch the numbers and make sure it’s the right decision.  

Only You can Decide What You can Afford

Only you can decide how much home you can afford. A lender can approve you for a specific amount based on standard calculations, but that doesn’t take into account your financial goals and budget. Remember to run the numbers yourself before you buy. If you buy too much home and go into foreclosure or bankruptcy, your credit will suffer.

Saving for Retirement or Other Expenses

When you decide to sell your home, consider your saving for retirement or your other expenses. If buying a larger home will prevent you from saving for retirement, to send your kids to college or other large expenses, reconsider selling your home and moving up. Spending more on a home can cost you a lot of money down the road if you’re not saving for other expenses.

Are You Loosing Money to Sell?

In some cases, you could be losing money to sell your home and move up to another home. Can you get a comparable interest rate? Will your new loan be larger or smaller than your current loan? Will you have to sell your house for less than you paid? If the market is down in your area, you might want to consider hanging onto your home until the market improves and you can get more money for your sale. In many cases, a matter of months or a year or two of staying in your existing home can make a big difference in the financial picture, so it’s worth doing the math.

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Steve SchraderBachar is a local mortgage planning expert who resides in Iowa and provides service to the clients of his mortgage planning practice across the Midwest.  You can reach Steve at 1-515-289-4381 or 515-360-5197.