Will You Need Cash To Sell Your Home?
Posted on: 18 September 2019
Many homeowners naturally expect their homes to gain value over the years. When it's time to sell, you expect to be able to not only pay off the existing mortgage but to make a tidy profit so you can move up. Unfortunately, that is only the best-case scenario and things don't always work out that way. In some cases, owners end up owing more on their home than its appraised value. Read on to find out why you may need to access cash before you sell your home.
Why Home Values Drop
Home values can take a plunge when the things that once made things awesome are not present anymore. Neighborhoods can be negatively affected by crime, gangs, noise, pollution, school quality, and other factors. What might have been an up and coming, new neighborhood when you bought the home may reside right next to a landfill or freeway now. Unfortunately, bad conditions can only make things worse when lots of neighbors try to place their homes on the market at the same time. When buyers see lots of for-sale signs lining the streets, they may shy away and move on to a neighborhood that is perceived to be more attractive.
Short Tenures Cause Problems
To fully realize your home as an investment, you might need to wait a bit longer before you try to sell it. If you are forced to sell the home soon after the purchase, you might not have had time to build up enough equity to cover all the costs that accompanied the closing. The longer you wait to sell, the less impact those one-time costs will have on you.
Your Home Has Issues
Home inspections have become more routine than optional for buyers and problems that the seller did or did not know about can surface after one is performed. If you have to deal with repair problems before the deal goes through, it could eat into your upcoming profits. Additionally, lowering the price of the home to compensate for issues might leave you with little to no wiggle room when it comes to paying off the mortgage.
Your Home Was Overvalued
Those who purchased during the real estate and lending bubble may have taken out a jumbo loan on a home that never should have appraised at the stated value. That kind of imbalance can be difficult to overcome with anything but paying your lender the extra funds just to get out from under the loan. If you can make a deal with the lender, a short sale deal could help.
Dealing with a mortgage balance that doesn't correspond to your home's value can be difficult.
For information about buying or selling single-family homes, contact a real estate agent.
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