Interest Rates & Selling Your Home: Should You Or Shouldn't You?

By Corrie Forcet, Realtor® of The Forcet Group | KW Suburban Tampa

Dave Ramsey - Real Estate & Finance Expert

"How much equity should you have before you sell your house? At the very least you want to have enough equity to pay off your current mortgage, plus enough left over to make a 20% down payment on your next home. If you can make enough profit to also cover closing costs, moving expenses, or an even larger down payment—that's even better."

So what about you? Are you on the fence about whether or not YOUR circumstances are prime for selling in this market? Consider the following:

You Should Sell Your Home Now If

• It's necessary. If you lost your job, have to move for work, or can’t afford your mortgage, selling now is a good idea. You could explore renting, then save or invest the profit to ride out the high interest rates or until your financial situation improves to the point that you can afford to buy again.

• You have flexibility. If you don’t need to sign a new mortgage with today’s rate because you have another home you can live in or are willing to rent, then you should consider selling and taking advantage of inflated prices while you still can.

• You want to downgrade. If you’re retiring, the kids have left, you’re recently divorced or separated, or you just prefer to live in a smaller space, it could be a good time to sell.

• If you can afford the high interest rates. If you can afford the higher interest rates, this can be one of the best times to sell and buy again. With so many buyers priced out of buying new homes with the high interest rates, you will have less competition from other buyers and more room to get better deals.

You Shouldn’t Sell Your Home Now If:

• You bought or refinanced recently. If you’re among the fortunate who bought or refinanced when the interest rate was below the 3% mark, you’re sitting on gold. Jumping into a new mortgage with the current APR could really eat into your profit over time, and interest rates for 30-year mortgages seem to be staying around 7% for at least a couple of years, according to recent reports from Housingwire.com. So if you have a 3% APR, pinch yourself —we won’t see those numbers again for a while. Instead of selling, use this time to pay down your principal and build more equity in your home.

• If you’re not sure about how you’ll afford your next purchase. Finding a new home that fits your budget with inflated home prices lingering along with 7% interest rates is going to make your experience a little more expensive. Don’t expect to upgrade to a larger home just because you sold for a lot of profit. Think about it this way; if you were to buy your current home with today’s interest rates, would you be able to afford it? The answer may likely be, no. So if you sell, you may have to actually downgrade your home to live around the same means you’re currently spending.

Any decision to sell or purchase a new home should be based on your specific financial situation as well as what level of risk you can tolerate. Some people will benefit from selling right now more than others. To find out where you fit in, reach out to me and we can crunch the numbers together.