Questions to ask first
- Where will I live next, and can I afford it?
- Do I need my equity for the next down payment?
- Will I give up a low mortgage rate by selling?
- How is my local market trending: prices, inventory and how fast homes sell?
- Is my timing driven by a job, family, school year or something else that can't wait?
Know your equity and your net
Your equity is your home's value minus what you owe. What you actually walk away with is less, after selling costs like your listing fee, any buyer's agent pay you offer, and closing costs. A home value estimate and a net proceeds estimate from your agent give you a clearer picture.
Weighing your current rate
Here is a hypothetical example. If your current rate is 3% and today's rates are near 7%, keeping the home and renting it out can be attractive, because your monthly cost stays low. If you need the equity to buy your next home, selling may make more sense. APR may differ; example only. Rates change daily.
Being a landlord takes time and carries risk, like vacancies and repairs. Run the numbers on both paths.
Look at your numbers
- Equity today and your estimated net proceeds
- Monthly cost of your next home
- Cost to carry two homes if you buy first
- Rent you could earn, minus costs, if you keep the home
- Taxes on any gain, if it might exceed your exclusion
Buying before you sell
Some homeowners want to buy first so they move only once. That can mean carrying two homes for a while. Some use a home equity loan on their current home to help with the next down payment. If that's your plan, apply before you list: CapCenter home equity loans aren't available on a home that was listed for sale in the six months before you apply. Other options depend on your situation, so talk with a loan consultant.
Why waiting has costs too
Waiting can make sense, but it isn't free. You keep paying your mortgage, taxes, insurance and upkeep. Prices and rates can move in either direction. Life changes that are prompting the move may not wait. A decision based on your needs and numbers is usually more reliable than a guess about the market.
Get a clear picture
Start with a home value estimate, then ask a listing agent for a comparative market analysis and a net sheet. If you're buying next, talk with a loan consultant about what you can afford. With those numbers in hand, the decision often becomes clearer.
