If you’re ready to sell your house in the near future, there’s some excellent news for you: The housing market is still hot, so if you put your home on the market this summer, there’s a good chance you’ll get a buyer and seal an agreement that you’re satisfied with.
When you’re thinking of selling your house, there are several factors to consider. And if you want to sell your property, Dave Ramsey recommends meeting these standards.
1. You have equity
The amount of equity in your home is calculated by subtracting what you owe on your mortgage from the value of your property. Negative equity is a terrible thing to have – it implies that you’ll need your mortgage lender’s approval for a short sale, which can harm your credit rating. If you have equity, however, you might make money when you sell your house.
Home values are up on a national level right now, and many homeowners have some amount of equity in their properties. Ramsey suggests that it’s preferable to sell when you’ve built up enough equity to pay off your existing mortgage and make a 20% down payment (or more) on your next home. You may avoid private mortgage insurance by putting down 20%.
2. You don’t have unhealthy debt
If you’re selling your home, it’s likely that you’ll want to buy a new one as soon and as quickly as possible. After all, you’ll need somewhere to live. However, before applying for a new mortgage, it’s critical to have a clean financial slate. This entails having no harmful debt such as a credit card bill weighing on your shoulders.
If your debt is causing bad credit, you may be denied a mortgage or get stuck with an unfavorable interest rate if it affects your credit score. Furthermore, many people who sell a home upgrade to a larger one. If you’re having trouble keeping up with housing costs, taking on more debt isn’t the answer.
3. You have a healthy emergency fund
Things can go wrong when you buy a home. And if you’re selling your house and buying a new one, the truth is that you don’t know what issues you’ll encounter. That’s why having a healthy emergency fund is so vital – because it allows you to maintain cash reserves in case you have to cover home repairs.
According to Ramsey, your emergency fund should have enough money to last three to six months of living expenses, in general. If you can increase your cash reserves even more, you’ll be that much safer.