Maybe your neighborhood has greatly appreciated in the past year or two. Maybe you’re expecting a child and you need that extra bedroom. Maybe you have a new job across town and the commute is becoming too much to bear. For these reasons and others, you may be wondering: Can I sell a home after 1 yr? Or, can I sell a home after 2 years? Or even, can I sell a home after 3 years?
The answer varies depending on your unique situation, but here’s a look at key decision factors when you’re wondering how soon you can sell your home after purchase.
Is it Time to Upgrade?
There’s a key reason why buying is more beneficial than renting when it comes to your overall wealth and portfolio. That reason is equity. When you make your monthly house payment, you’re buying equity in your home — equity you should get back with interest upon resale. When you make a monthly rent payment, you’re spending money that you’ll never see again.
This is how a family with relatively stable income continues to upgrade their home through the years. Say you buy a $200,000 home and stay in it for five years. Perhaps you pay down the loan to $150,000 and the home appreciates to a resale value of $250,000. You suddenly have $100,000 to apply toward a down payment on your next home, which can then be larger, more expensive, served by better schools and in a nicer neighborhood. Realtor fees, closing costs and other factors will come into play, as well.
The Five-Year Rule
There’s a general rule of thumb that you need to wait at least five years to sell your home to outpace the closing costs, realtor fees and other factors. Five years also provides more time for you to build equity and potentially more time for your home to appreciate. Also, the longer you pay on a mortgage, a greater percentage of your monthly payment goes to principal rather than interest. This, of course, helps accelerate the amount of equity you’re building in your home.
What If I Need to Sell. How Soon Can I Sell My House?
The five-year rule is simply a guide. As mentioned, your neighborhood could have greatly appreciated in a year. It happens. And that appreciation might give you more equity than you would have otherwise. Of course, if you’re looking to buy in the same town, it’s possible the homes you would upgrade to have also appreciated.
There’s also another option if you can afford to swing it: You can rent out your existing house. If you can secure a tenant whose monthly rent covers your principal, interest, taxes and insurance (or at least thereabouts), then you can keep the house for longer and build the equity needed for a more profitable sell. Some homeowners don’t have the capital to make a down payment on a new house without selling their old one, and some don’t want to serve as a landlord.
Get the Expert Guidance You Need
At CENTURY 21 Core Partners, we work each day with home buyers and sellers. Each of our clients is unique, but many are looking to sell homes they’ve owned for less than five years. We can help you analyze the market and your own home’s value to gain an understanding of what’s best for you and your family. Our team of real estate professionals knows the York area inside and out, and each can be the voice of knowledge and experience you need as you consider selling your home and purchasing a new one.