A common goal for many homeowners is to remain in their home until it is paid off and even well into their retired years. Some people relocate periodically because of a job transfer or for other significant reasons that pull them out of the area. While these are common homeownership experiences, there are many financial reasons why now may be the right time for you to sell your home for cash.
If you have fallen behind on your mortgage payments, your mortgage company may have already reached out to you about initiating foreclosure proceedings. A foreclosure is a serious matter that can have damaging effects on your finances for many years. It could also make it challenging to find a landlord who is willing to rent a home to you. If you can no longer afford to live in your home or if you cannot catch up on the payments before the foreclosure date arrives, selling the home quickly is a great idea. Proceeds from the sale will likely pay off your mortgage in full, and you may even have some extra money remaining from the sale to use for other beneficial purposes. More than that, your credit rating will not take a huge hit if you avoid foreclosure.
Avoid Out-of-Pocket Repair or Replacement Expenses
If you do not keep up with home maintenance and repair tasks regularly, they can easily skyrocket out of control. You may now be in a position where you cannot afford to pay for a new roof, siding replacement or other major expenses that are necessary. All of your assets may be tied up in your house. Perhaps you anticipate being hit by many replacement costs in the near future because of the age of your home and want to avoid the financial stress. Selling your home may be a convenient way to avoid these expenses. You may consider moving to a newer home that may not require such significant work for many years.
Move to a More Affordable House
If your financial situation has changed recently and your home is no longer affordable, it makes sense to cut the ties and relocate to a more affordable home. Even if your home is affordable, you may no longer need as much space. Making huge mortgage payments on space that you do not need may seem wasteful. Moving into a more affordable space can free up much-needed cash in your budget. This can be used to improve your lifestyle, make additional investments and address other goals and dreams.
Cash in on a Hot Market
A key to profiting on an investment is to buy low and sell high. The real estate market is cyclical, and you may be aware that your home’s value is currently at a peak with a downturn expected in the months ahead. While some people may advise you not to view your home as an investment, it may make financial sense to lock in a profit by selling. You can later purchase a new home after housing prices in your area have declined.
Pay Off Debts
If you have a substantial amount of equity in your home, selling the property gives you access to that equity. An alternative to selling the home is to take out a home equity loan. However, a home equity loan only gives you up to 75 percent of the home’s value in many cases. A sale, on the other hand, may enable you to profit fully after subtracting closing costs. With this cash in your pocket, you could pay off bothersome debts and scale back your budget in the process.
While these are some of the more common reasons why you may be thinking about selling your home, there may be other factors at play as well. Selling your home is a major financial move, so it should only be done after careful consideration and thorough reflection on the pros and cons. It may also be helpful to talk to a real estate agent about the sales process so that you can make a more educated decision about how to deal with your home.