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I've only owned 1.5 years, but looking to sell my home because I want to change neighborhoods. Since most of the early mortgage payments on my 30-yr fixed rate loan go to interest rather than principal, how do I calculate how much I need to sell for to break even? Is there an example spreadsheet that considers everything including closing costs, taxes, etc?

Thanks, Chirag

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It depends on what you mean by "break even." If you're trying to end up where you started financially before you started the process of buying the house then you're asking a lot. You're essentially asking to get free housing for the 1 1/2 years.

The only "income" you have from this process is the additional equity in the house (the principal reduction of your mortgage). Everything else is an expense:

  • all of the fees you incurred buying the house
  • all fees that you will incur selling the house (including a 6% commission possibly, plus closing cost concessions to the buyer in the neighborhood of 3%, which are common these days)
  • all interest, taxes, and insurance
  • all improvements
  • all utilities

Add up all of those expenses, and subtract the increase in equity, and that's the difference in your sales prices and your purchase price. It's a big difference. You may have been able to pull this off 6-7 years ago, but probably not now.

A more realistic goal is to at least lose only what it would have cost you to rent a comparable house. (That's essentially what you're doing anyway.)

  • How about the taxes saved by deducting the interest from my federal tax returns? – Chirag Patel Jan 31 '12 at 5:17
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If it has only been 1.5 years you should still have your closing papers handy.

Just add up the following amounts:
- Total loan value at closing
- Any costs you paid directly at closing out of pocket.
- Property tax payments (if you don't escrow them)
- Your monthly payment * how many payments you have made.
- The costs for any improvements you have done on the house.

Then I'd subtract (assuming it is included in monthly payment)
- Total PMI payments
- Total insurance payments

  • 4
    In a longer term period (like 20 years), inflation may also be part of the picture. – trip0d199 Feb 1 '11 at 14:24

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