Selling your home is a big step. How do you know you’re ready to sell your home? Here are 8 signs that you’re in a good position to sell your current home and buy a new one.
1. You have positive equity in your home
Equity is the difference between what your house is worth and what you owe on your mortgage. So if your house is worth $300,000 and you owe $200,000, then you have $100,000 of positive equity. Most homeowners have positive equity in their homes, but it’s possible to have negative equity if your home is now worth less than what you paid for it. How much equity do you need to sell your home? Unless you have to do so to avoid foreclosure, don’t sell your home unless you can sell it for more than you bought it for. In terms of what you need to buy a new home, it’s best to have enough money from the sale of your current home to make a 20% down payment on a new home and to be able to pay for closing costs and moving expenses.
2. You’re free from debt outside of your mortgage
The best case scenario for buying a new home is that you are financially secure, with no debt outside your mortgage and enough cash in an emergency fund for at least 3 months of expenses. However, it is possible to carry some debt outside your mortgage and still be approved for a loan for a new home. Lenders will look at your DTI, or debt to income ratio to decide if you’re eligible for a loan. A favorable DTI is less than 43%. To figure out your DTI, add up all your monthly debt and divide it by your monthly income. For example, if your monthly debt is $500 and your income is $3,000, then your DTI is 16%.
5. You have cash for home improvements
In order to get the most out of the sale of your current home, it may be necessary to make some upgrades. Typically, the best places to invest money are in paint jobs, the exterior of the house, and upgrades to the kitchen and bathrooms. Home improvements aren’t a must-have, but having the cash on hand to update your home and maximize its value is a good sign you’re ready to sell.
6. You're emotinally ready to sell
While you may be financially in good shape to sell your home, it’s also important to assess whether or not you are emotionally ready. Can you handle the criticism of your home that potential buyers may make without taking it personally? Are you ready to let go of the memories that you created in your home? Are you prepared to put in the work to get your home ready for the market and keep it ready to show for weeks or months? These are some of the questions you will need to answer in order to determine if you’re emotionally ready to sell.
7. Your current home no longer fits your needs
Whether you need more space to accommodate new family members or you’re ready to downsize, it’s important to assess whether your current home fits your needs. Changes in your family size or lifestyle indicate that you’re ready to sell.
8. You’re in a sellers market.
Do some research and find out the state of your local market. If you're in a seller’s market, meaning that demand for homes is greater than the number of homes available, it’s a good time for you to sell. In a seller’s market you’re likely to get multiple offers on your home that are competitive and you’ll be able to make money off the sale of your home, which is always the outcome you want as a seller.
In summary, to determine if you’re ready to sell your home, you’ll want to take stock of your financial situation, your emotional situation, and the state of the local market. If these three factors are all working in your favor, it’s a sure sign that you’re ready to make the move of selling your home.
Moving into a new home is an exciting time, and you’re probably daydreaming about decor and paint schemes and new furniture. But before you get into the fun stuff, there are some basics you should cover first.
Change the locks
Even if you’re promised that new locks have been installed in your home, you can never be too careful. It’s worth the money to have the peace of mind that comes with knowing that no one else has the keys to your home. Changing the locks can be a DIY project, or you can call in a locksmith for a little extra money.
Paint and Renovate
If you are planning on painting and/or doing other renovations, line up the contractors for right after closing. Not having your items in the house will make the process go smoother for the contractors.
Steam clean the carpets
It’s good to get a fresh start with your floors before you start decorating. The previous owners may have had pets, young children, or just some plain old clumsiness. Take the time to steam clean the carpets so that your floors are free of stains and allergens. It’s pretty easy and affordable to rent a steam cleaner—your local grocery store may have them available.
Call an exterminator
Prior to move-in, you probably haven’t spent enough time in the house to get a view of any pests that may be lurking. Call an exterminator to take care of any mice, insects, and other critters that may be hiding in your home.
Clean out the kitchen
If the previous occupants wanted to skip on some of their cleaning duties when they moved out, the kitchen is where they probably cut corners. Wipe down the inside of cabinets, clean out the refrigerator, clean the oven, and clean in the nooks and crannies underneath the appliances.