If you’ve recently purchased a home, you may already be wondering when you can sell it. The short answer is, once it’s legally yours, you can sell it whenever you want. However, the long answer is a little more complicated, because while it is legal, it often doesn’t make financial sense to resell quickly. Our team at GVC Mortgage understands that sometimes life happens and you may find yourself wanting to sell earlier than anticipated, so we’ve spelled out your options to help you make a smart financial decision.
Reasons to Sell Early
As mentioned above, we know that “life happens”. A lot can change in a short period of time for homeowners. Maybe you unexpectedly added to your family and your home no longer fits your needs. Or, you may need to move because of an unexpected career change that takes you out of your current area. Or possibly, the market is so white hot that you want to take advantage of the opportunity to turn a profit while you can.
How Soon Can You Sell?
Legally, you’re free to do whatever you choose. However, financially, it is a wiser choice to wait until you’ve reached the breakeven horizon before listing your current home. On average, it takes two and five years to accrue enough equity and/or to sufficiently pay down the balance on your mortgage so as to not lose money on your investment. However, it’s important to note that the breakeven horizon varies greatly based on where you live, so it’s wise to work with a professional mortgage officer as you weigh your options.
Selling Your Home
If, after considering your financial options, you’re still ready to sell early, it’s wise to do the math first and anticipate potential loss. Knowing your financial outcome ahead of time can lower stress and help you make practical decisions. First, work with an agent to determine your current home’s listing price. Then, subtract closing costs, seller prep costs, and mortgage payoff amount from your projected sale price.
Finally, there are a few other negative consequences of selling your home early. First, if you’ve lived in your home for less than two years, you will likely have to pay capital gains taxes on the profits of your sale. Also, some lenders charge a prepayment penalty if you sell your home within a certain time period after buying. Finally, selling your home quickly might make potential buyers wonder if there’s something wrong with the home or its location.
Ultimately, how soon you can sell your home after you purchase it, is up to you and what is right for your situation. If you have any additional questions about the home buying and selling process, contact GVC Mortgage in Indianapolis at (317) 564-4906.