A common piece of advice new homebuyers are likely to hear is that they should plan on staying in the same house for at least five years. Why is that?
The basis for this argument is that if you decide to move and sell before five years is up, you will likely lose money on the transaction. This happens for two primary reasons. The first is that you have to factor in closing costs, which you will pay on the first purchase, the sale, and the new purchase, which can add up to tens of thousands of dollars.
The second is that the way most mortgages are structured, it’s not until year five that you will have paid off enough of the principle to make it financially beneficial to sell. Of course this varies by region and larger economic conditions, but it is good to be aware of the tradeoffs when deciding to buy or sell your home. Click here for more.