helping you through the house-selling process

Selling real estate can be just as much work as buying. There are so many things to worry about as you prepare your home to list on the market. Then you have to worry about the real estate agent you will hire to help you get the house sold. After that, you have to worry about who will be coming in to tour your home throughout the week. Will you hold an open house? Do you take the first reasonable offer you are presented with? Our blog was designed to assist you through the selling process a little bit easier.

Buying A New Home? Ask Yourself These Two Questions


Chances are that the biggest purchase that you'll ever make is your home, which is why it's so crucial that you put a lot of thought into this decision. You want to be completely satisfied with your choice, and know that you can afford to pay off the home for the foreseeable future. That's why you should start the home buying process by asking yourself these two questions.

Do You See Yourself Staying In The Home For At Least Five Years?

In real estate, there is a five year rule when it comes to buying a home. The reasoning behind it is that if you buy and sell a home after being in it for less than five years, it is not worth it financially.

By making the mistake of buying a home that you feel will be your starter home for a year or two, you could end up losing a lot of money in the process that would make those initial years more expensive than renting. This is because you will have to pay closing costs when you buy and sell a home. These are around 2%-5% of the total cost of the house. A $200,000 house could easily have as much as $10,000 in closing costs associated with it.

You will also be fighting against your mortgage amortization schedule. In those first years after buying a home, the majority of your mortgage payment is made up of interest, with very little going toward the principal.

Five years is just a guideline, and you should always run the actual numbers to see if it is worth it to sell early. Add the interest paid during that time from the amortization schedule, the closing costs, and property taxes together. Then divide that dollar amount by the amount of months you see yourself staying in the home. If that number is less than what you could pay in rent per month, then it would mean that it would be worth it to stay in the home for less than five years and sell early.  If not, then you are losing money.

Can You Realistically Afford The Home You Want To Purchase?

You may be pre-approved for a home loan much bigger than your budget, which can make getting a larger home that costs more money very tempting. In real estate, the housing ratio states that you shouldn't spend more than 28% of your pre-tax income on your home. This includes your mortgage, insurance, and taxes. It will help ensure that you have enough money to pay for your home, while not being house poor and unable to pay for other expenses.

Never buy a home in anticipation of getting a raise or a new job. Always factor in your current standard of living.

For answers to other questions you may have about buying a home, speak to your real estate agent.


16 February 2016