Upgrading to a New Home for Sale
So it’s time to move on. You have decided to move into a larger, better home or just to change neighborhoods. This can be a very difficult time to understand how the housing market is moving. Having a professional agent who understands the local area and your personal economic situation can help you move into the home of your dreams without dipping into your retirement fund.
Here are a few tips that could save you, and your piggy bank:
If you are planning on moving out of your current home into a new one, there are some major cost cutting ways to save you big bucks. When you sell your current home, you will hopefully make a lot of money, but may be giving much of it to the government in the form of capital gains taxes if certain conditions apply. What if there was a way to sell your home and keep all the profit for yourself? It sounds pretty good, huh? If you haven’t heard of this before, it’s because usually only experienced agents use it. This helpful tool is called a 1031 Like Kind Exchange. It is simply the process of selling your home the same way that you normally would, but trading it with the process of the 1031, which defers all the taxable gain from your first home and lets you keep it until you sell your new home, but if it’s your dream home, why would you? The only catch is that the home you are transferring the funds to must be worth more than the house you are selling.
Keep Some Cash Readily Available Having cash on hand can help you save on extra costs that are involved in moving up. Being able to pay as large of a down payment as possible can get you better interest rates and simply more types of loans. If you are able to put 20% of the cost of the loan as a down payment, you will probably be able to skip the cost of Private Mortgage Insurance (PMI). Even if you can’t put that much down, we can save you thousands with some advice on how to pay your PMI and how to taxably deduct it.
Keep Your Credit Clean Your credit score will have a big impact on what type of loans you will be able to have. Your credit score will range from 350-800 and anything under a 720 could drastically limit your possibilities. Knowing your credit score can prepare you for what you need to do. Even though you may have had great credit for your first house, any late or missed payments on credit cards or loan payments may have had negative impacts on your FICO credit score. Being able to pay down some of your existing debt and catching up on all your payments is a start to increasing you score and your chances to get a good interest rate on your loan. For a free look at your credit report, you can go to either of the three credit bureaus: Experian, Equifax or Trans Union.