Buying your first home can be a long and emotional process, but the process of selling your Las Vegas home can be even more difficult. Besides the fact that you have to keep your home as clean as possible, selling your home can be an emotional journey as you’re inviting strangers into your home to decide whether or not the home that you love is going to work for them. While you’re dealing with all of this, whether you’re in the heat of summer or the dead of winter, what might make it harder is the timing of your home’s entry to the market: selling your home too early, before you’ve occupied it for a certain number of years can cost you.
Why did people ever buy homes? Homes, no matter how essential, are and always have been status symbols, so owning one always meant that a person was fortunate enough to be able to afford a home. Why are we still encouraging home ownership? Because of the financial benefits that exist in home ownership. For one, owning property can raise your net worth. Another great reason for home ownership is collateral, in case you find yourself in a compromising financial situation. You’ve also got a building that you are entitled to rent out, or in which you can open many types of businesses. Owning a home can be a fantastic way for you to build up your credit, but purchasing one isn’t a solution to any problem, except that you need to purchase a home, and can afford to make the monthly payments, unless you pay cash.
How Long Should I Stay in My Home?
Financial advisors and real estate professionals recommend remaining in the home you’ve purchased for a minimum of five years. This recommendation, referred to as the Five-Year Rule, is to the benefit of consumers. On average, it takes about five years for a borrower to pay off the interest on their mortgage, and this rings true across the nation, including in Las Vegas. Mortgages calculate the cost of your home with the interest imposed by both federal regulations, and the banks’ own interests. Your credit, of course, will also affect your interest rates, but whatever your interest rate, you can expect that it will take about five years for you to pay all of the interest on your mortgage, as well as a large portion of the principal.
Yikes! Does That Mean I Can’t Leave for Any Reason?
The simple answer is no, this doesn’t mean that you can’t leave your home, so don’t worry! Plenty of people need to sell their home on a quick turnaround for a variety of reasons. Some of the most common reasons that people move from their Las Vegas homes early is due to illness of the homeowner, or a family member; a job change, or a change in the housing market in Las Vegas. Any or all of these reasons could put you in the position of needing to sell your home early, but understand that the reason that it’s better to keep your home until you’ve made a dent in the principle is because you could lose a great deal of money. Closing costs on a new home can add up to thousands of dollars. Because your mortgage payments only affect the interest for the first few years, selling your home without paying the principal will leave you with very little if you leave too early; before you have time to pay on the principle, and build equity in the home.
Something that could actually require you to stay in your home could be a reverse mortgage. In a reverse mortgage, you’re paid cash from the equity that you have in your home. Reverse mortgages are really a program created to keep elderly and financially-vulnerable people in their homes. If finances or anything else resulted in a reverse mortgage, make sure that you work closely with your lender, and with your real estate agent. Selling a home with a reverse mortgage is a different challenge, and you’ll need help.
What If I Have an FHA Loan?
FHA Loans were originally created to assist new home buyers during the 2007 Financial Crisis. These loans were unique in that they were targeted toward younger people who were looking to build their credit. FHA Home loans are generally interest-free, which is a huge bonus to anyone with a lower credit rating who is ready to buy a home. The trick to purchasing a Las Vegas home with a FHA loan is that you must remain in the home for at least fifteen years. If you absolutely must leave before then due to unforeseen circumstances, you will have penalties to pay.
Hold On – Penalties? What Are Penalties?
Think of penalties as taxes that you have to pay in some situations if you sell your home. If you have a reverse mortgage, you may have to pay capital gains taxes, if you are able to sell your home for more than it’s fair market price. For FHA Loans, you will have to pay back any tax benefits that you may have received as a result of taking out an FHA Loan. Whether you have to pay back penalties in a lump sum, or whether you have the options of making those payments, there’s no need to add to your financial burden.
How Quickly Can I Sell My Home?
In Las Vegas, homes are often on and off the market in the blink of an eye. There is no right or wrong way to sell your home, and technically, you don’t have to wait for the ink to dry on your mortgage trying to sell your home again. If you do need to sell your home early and quickly, make sure that you’re considering all of the offers that come your way, and make sure that you bring on an experienced real estate agent to help you navigate the paperwork, and manage who comes in and out of your home.