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Hello, we currently own a home outside of Seattle. We are locked into a low rate and have about 400-500k in equity. We currently have long commutes and would like to move closer to our work, Redmond, which is a higher cost area. Buying in that area with higher costs and low inventory is difficult/not feasible.
Would it be foolish to sell our current home and rent? We could put the equity into some CDs etc, so it would be doing some work while we are out of the housing market.
Rent would be higher than our current mortgage but we could absorb this. If we were to find a house to buy, this new mortgage would be higher still, and we could probably do it, but it may not be a home we love.
I understand these decisions are very case specific, but are there any thoughts?
...have about 400-500k in equity ...would like to move closer to our work ...higher costs and low inventory
Would it be foolish to sell our current home and rent?
You have, I believe, 2 years from the time you sell a house to put the equity in another house or you have to pay capital gains tax.
Can you rent your house out and rent another place closer to work?
To get Cap gains tax exemption ( 250k single/500k profit couple) you must have lived in home ( as your homestead/primary home) 2 of the last 5 yrs. Need not be consecutive years.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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We are near Redmond in Sammamish, and homes here are still selling in 5 days or less at or near asking, despite the high interest rates. I wouldn't expect prices in Redmond to drop, but you could put your equity into a condo there now and have a very low payment. In fact Redmond and Bellevue have listings for under $500k. When you are in a better position financially you can sell that and again have $500k or more down if you prefer a sf house.
Would it be foolish to sell our current home and rent? We could put the equity into some CDs etc, so it would be doing some work while we are out of the housing market.
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My vote: stay put.
You take your equity and put it into CDs making 5%. That's $20,000 to $25,000 per year. Who knows how long that interest rate is going to be around.
I imagine rent in Redmond is considerably more than $2000 per month so you are already losing money while you are building equity for your landlord.
The other side of the coin is that you may have a career change some years from now that may also result in a long commute. Will you do the same thing all over again?
Hello, we currently own a home outside of Seattle. We are locked into a low rate and have about 400-500k in equity. We currently have long commutes and would like to move closer to our work, Redmond, which is a higher cost area. Buying in that area with higher costs and low inventory is difficult/not feasible.
Would it be foolish to sell our current home and rent? We could put the equity into some CDs etc, so it would be doing some work while we are out of the housing market.
Rent would be higher than our current mortgage but we could absorb this. If we were to find a house to buy, this new mortgage would be higher still, and we could probably do it, but it may not be a home we love.
I understand these decisions are very case specific, but are there any thoughts?
Can you rent out your current home and get good cash flow on it?
I believe we could easily rent out our current place. Mortgage currently $2000, could rent for ~$3000-3400. We could find a rental we are happy with in the 3500-4000 range. That would pencil out for us just fine, now just the question of whether we are up for putting in that work, vs status quo.
No. Everything except staying put has the potential to cost you an enormous amount of money one way or another. I would never sell that low mortgage.
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