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Home Sellers Warning
By Jeanette Joy Fisher, Fri Dec 9th
If you're thinking about selling your home and moving up to alarger home, do your math homework before offering your home forsale. Read the following story to see what can happen to homesellers who don't do their math. A young family sold their home in California, before theydetermined how to buy their next house. All they thought aboutwas moving into a larger home for their growing family. Two years before, after this young couple purchased their firsthome, they bought a minivan with payments. They increased theircredit card debt with home furnishings purchases. Then, the wifequit working to stay home with their new baby. The family stillhad sufficient money to make all payments on time.
They fell in love with a larger new model home in a nearby tracthome development. The sales agent convinced them the new homewould only cost them another $200 per month. The family had no trouble selling their home. To qualify for thenew home mortgage payment, they had to pay off the minivan,student loans, and the credit card debt. Out of their home saleproceeds, these payoffs left less than a 10% down payment fortheir new home. Because of their changed income and low down payment, theydidn't qualify for the new home of their choice. With only 5%down, the couple had to pay higher interest rates on a second toavoid mortgage insurance. Without the wife's second income, thetotal payment meant that they only qualified for a new mortgagefor a home which cost less than the one they sold! Before you put your home on the market, make sure you can buythe home you want. Consider the following financial concerns: Talk to a loan officer and check your credit. Don't get caughtafter selling your home, when it's too late,
to repair anycredit issues. Of course, you may have a great down payment fromthe sale of your home, but other bills like credit card debt,auto loans, and student loans may need to be paid off so youqualify for the new mortgage payments. Ask your loan officer how much of a monthly payment and the downpayment amount you'll need to buy the home of your choice. Do your math. How much can you expect to net from selling yourhome? 1. Do you have a mortgage pre-payment penalty that could eat upa significant amount of your equity? 2. Determine selling commission expenses. Can you sell your homeeffectively on your own or do you need to pay 4-6% of yourselling price for a real estate agent's expertise? 3. Estimate your closing costs. Ask a local closing or escrowcompany for an estimated closing cost amount for a home in yourprice range. 4. How much work does your home need to ready the property for atop-dollar sale? Which upgrades or redecorating expenses makesense financially? Consider all the expenses of selling, determine your actualprofit, and compare that amount to your required down payment.How much of a home you can buy with your qualified monthlypayment amount? After you do your math homework, you'll be ready to think aboutselling your home. Don't get caught like this young family andbe forced into a smaller home. Copyright © 2005 Jeanette J. Fisher - All Rights ReservedWorldwide. About the author:Jeanette Fisher helps stage homes for top-dollar sales. Sheteaches Design Psychology and real estate investing. Jeanette isthe author of many books including "Sell Your Home for TopDollar--Fast!" and "Credit Help! Get the Credit You Need to BuyReal Estate." http://recredithelp.com Free"Credit Tips for Mortgage Financing" http://sellfast.info
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