If you are currently struggling to keep up with your monthly bills, the thought of selling your home may sound like the perfect solution. Although your mortgage payments would disappear, there are a lot of other factors to consider before forfeiting your home.
We’ve laid out some things to keep in mind when evaluating whether or not selling your house is the right decision for you.
Are Your Mortgage Payments Too High for You?
When deciding if selling your home will help you get out of a financial crisis, the first step to take is to evaluate your biggest current expenses. This will help you to truly pinpoint where the root of your financial problem lies. If you discover that your mortgage payment is eating up a good chunk of your paycheck, this may be an indicator that it is time to sell for a more affordable property.
For reference, your mortgage payment should be no more than 25% of the amount you bring home every month. If half of your income gets swallowed up by your mortgage every month, take that as a red flag. It may be time to seriously consider listing your property. Slashing your housing budget down to size may end up being the only way you will be able to cut back on expenses and stay above water financially.
Is Your Debt Piling Up?
Between student loans, credit card payments, and your monthly mortgage, something’s got to give, right? If you find yourself struggling to keep up with all of your debt payments every single month and think that selling your home is the solution, you may want to think again.
Although selling your house will get you out of a sliver of your debt, it certainly won’t fix the real issue at hand; which is your spending habits. Before giving up on your home and listing it, try getting into better money management habits.
Only spend what you know you can afford or need every month. Set a budget for yourself and do your best to stick to it. Making small adjustments to your monthly expenditures can really make a difference when you’re trying to land back on your financial feet — and could end up saving you from dealing with the hassle of packing up and moving altogether.
You’ve Had an Unforeseen Emergency
Life can hit pretty hard unexpectedly, with anything from car troubles to health scares. These unforeseen life events are both unpleasant to deal with, and can be extremely costly in the aftermath. You may even be left with a substantial amount of debt, either from accrued hospital bills, car replacement parts, or any other unwanted bills you find yourself suddenly burdened with.
In cases such as these, it’s best to consider how much you have laid out in the down payment of your current residence before selling your home. You may find it wise to stay put if you have already invested a good amount of money into the property you already own.
If you are truly struggling to make monthly mortgage payments, you may be left with no other choice but to sell. It is best to review all of your options before making a decision, and always take a very close look into your current financial state.
Can You Afford to Move?
Between real estate commissions, closing costs, and real estate sales tax, you may find yourself losing upwards of 10% of your home’s sales price when deciding to move. If your home is worth $400,000, we’re talking about a $40,000 loss just from the sale of your home. This expense may even far exceed the amount of debt you currently have, causing you to move farther backwards into your financial issues at large.
Let’s not forget that it often takes a while to even sell your home; odds are you probably won’t get an offer right after listing your property. That means if you’re looking for a get-out-of-debt-fast card, selling your home is definitely not the solution you are looking for.
Your Home May Be Your Biggest Asset
For a lot of people, their home is the biggest and most important investment in their name. By the time retirement rolls around, it is oftentimes their only significant investment. It’s certainly not easy to get equity out of your home, which can work to your advantage if you leave it alone.
That’s why it is so important to keep paying the mortgage down and letting the price go up. By staying in your home and choosing not to sell, you will have one huge asset going for you as you get older.
If selling your home turns out to be the most viable option given your current financial situation, a Clever Partner Agent can help maximize your margin of profit by first helping you get the best possible price for your house, and by only charging you a fraction of the typical commission fee for a full-service agent.