Financial Considerations
When Selling Your Home
Costs of Selling Your Home
Selling your home is about making a profit, however, that does not mean this it doesn't come without costs. Here is an overview of some of the major costs you'll be responsible for paying.
MORTGAGE BALANCE
This is the remaining balance on your home loan. You will need to pay off your entire mortgage when your home is sold.
HOME EQUITY LOANS
Any loan against the value of your home will also need to be paid in full after the sale of your home.
PRE-PAYMENT PENALTIES
The bank of lending institution that currently owns your mortgage title may assess a pre-payment penalty. You should speak to your lender NOW, and find out the exact amount of your pay-off, and what the penalty fee is. You may be able to negotiate with them to reduce or waive the fee.
PRE-SALE PREPERATIONS
In most cases, it is not advisable to make major investments into your home right before a sale. There are however, a few things that can be done to increase your home's curb appeal. Fix minor problems and make your property most attractive as possible. Together we can identify these items, and create a pre-sale budget for these, to ensure a return on your investment.
CLOSING COSTS
All closing costs with the sale of your home will be listed for you and the buyer in the HUD-1 statement. The buyer is generally responsible for all the following closing costs. In some cases buyers make a request for you as the seller to cover their closing costs as part of their purchase offer. We will negotiate these terms if they are made.
- Loan Fees for the buyers mortgage
- Insurance Premiums
- Title Costs (Examination & Insurance)
- Legal documents and service fees
- Recording or Filing fees
TAXES
The money that you make from the sale of your home is considered capitol gains. The good news is, if the home was your primary residence, this can be excluded from your taxable income.
To exclude the full portion of these gains, you will have to have lived in the home 24 months out of the past 5 years.
If you do not meet the occupance requirements, you still may be able to exclude a prttion of the gains if you are selling due to a circumstance related to job or health.
If the property is a real estate investment, your profits will be considered taxable income, and will be subject to state, federal, and self-employment taxes.
MOVING COSTS
Moving isn't only a hassle, it can also be very expensive! Whether you are moving to a new house in your neighborhood, or across the country, it is important to estimate the cost of moving from your home once it is sold.
Here is a cost worksheet you can use to estimate what it will cost you to sell your home.
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