This Is the One Situation Where Selling Your Home Could Pay Off Big Time Now

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Thinking of selling a home? It pays to do so under the right circumstances. Read on to learn more. 

There are plenty of good reasons to make the decision to sell your home. Maybe you’re aiming to relocate to a less expensive part of the country. Or maybe you want to move to an area where there are more jobs available in your field.

These days, home prices are up, due largely to a lack of inventory. In November, the median existing home sale price was $387,600, reports the National Association of Realtors. That’s a 4% increase from November 2022 and the fifth month in a row where home prices rose on a year-over-year basis.

But while you may be eager to sell a home today to capitalize on higher market values, you might also run into a problem if you sell today — getting stuck with an expensive mortgage.

The mortgage rate conundrum

Many homeowners who own property today are sitting on low mortgage rates — either because they signed initially at a competitive rate or because they refinanced their home loans back in 2020 or 2021, when mortgage lenders were offering some of the most attractive rates in years.

If your mortgage has a low interest rate attached to it, you may not be so eager to give it up. But if you sell your home now and are forced to sign a loan on a new one, you might get stuck with a mortgage rate you aren’t happy with.

That’s why you may feel conflicted about selling your home. It’s good to sell at a time when there’s not a lot of competition and home prices are up. But what you gain by virtue of a higher sale price, you might lose by locking in a more expensive mortgage. There may, however, be a way around that situation.

Can you buy your next home in cash?

Since the main drawback of selling a home today is having to sign an expensive mortgage for your replacement home, the solution is to simply buy your next home in cash. Easy, right?

Of course not!

For many people, that’s just not an option. And if you’re upsizing or moving to a more expensive market, it’s especially not feasible.

But let’s say you’re either downsizing or moving to an area with a lower cost of living. Perhaps you can sell your current home for, say, $600,000, walk away with a $300,000 profit, and then buy your next home outright for $300,000.

You may need to make some sacrifices for that to be possible, like buying a smaller home or one that’s less updated. But if it’s doable, you really get the best of both worlds — a higher sale price for your existing home without having to bear the burden of a higher mortgage rate.

Clearly, this strategy will not work for everyone. But if you think there’s a good chance you’ll be able to buy your next home mortgage-free, then it could pay to work on listing your home in the near future.

We don’t know when home prices will start to come down. And while they’re certainly not expected to plummet overnight, you don’t want to give up the chance to profit big-time if you’re intent on selling. So you may want to put your plan to sell high and buy a new home outright into action — before the market changes and your home’s value starts to shrink.

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