Should you love your home despite its annoying little quirks, or should you sell it and find a house that better fits your needs?
Determine How Much Equity You Have in Your Home
First, take emotion out of the equation and look at the facts. Have you lived in the house long enough that you’ve acquired sufficient equity to justify selling? Ideally, you should have lived in your current home for at least three years. While it isn’t required that you have equity to sell your house, you could be required to pay the remaining balance on your mortgage and the closing costs if the price you get for your house doesn’t cover the entire amount. In this situation, you’d end up owing money, which isn’t ideal, especially if you want to buy another house.
To determine the equity you have in your home, take the amount your house is currently worth and subtract the balance of your mortgage. Let’s say your house is worth $300,000, and your mortgage balance is $250,000. That means you have $50,000 in equity. If you’re not sure what your house is worth, look at similar houses in your area that have sold recently. Make sure you’re comparing apples to apples — the houses you look at should be similar in age, square footage, number of bedrooms/bathrooms, and location.
If you’re still not sure how much your home is worth, contact a real estate agent in your area and ask them to review the comps (comparable sales) with you. Agents have access to the MLS (Multiple Listing Service) and can give you the most up-to-date, accurate information available.
Review Your Finances
Not only do you need equity in your home, but you’ll also need cash on hand. You’ll need money for home repairs, staging the house, closing costs, real estate commissions, and buyer concessions. Make sure you can afford to buy a new home, especially if you’re in a seller’s market. Will your mortgage be higher, and if so, will the new amount fit within your budget? Use the Homes.com mortgage calculator to help you determine what you can afford.
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