Enhance Your Financial Future When Selling Your Home

In the high cost housing market of Contra Costa county, California, it is critically important to make educated financial decisions when selling your current home and purchasing a new home. The proceeds from the sale of your home are often your single largest transfer of assets and represent an opportunity to transform your financial future.

The national average home price is $208,700 and, at that, more than 80% of Americans are significantly under-funded for retirement. With the median home price of $698,000 in Walnut Creek (as of 10/07), retirement funding is even more dismal - a fact that can easily be corrected.

For example, assume that you will be $500k short for a comfortable retirement in 20 years and your account earns an average of 8%. There are two methods to close the gap:

- an additional monthly deposit of $848.87

- Increase the mortgage on your new home and make single immediate deposit from your net proceeds of $107,280. The cost of this option (using a 20 year fixed rate at 6.50%) is $799.85, BUT REMEMBER, mortgage interest is tax deductible providing additional income tax savings of $160 per month (using a 20% effective tax rate). The net cost for this option is $639.85 per month versus $848.87 per month – a savings of $209 per month or an additional $49,920 over 20 years.

Follow these steps to enhance your financial future when selling your current home and buying a new home:

Get a “Net Sheet” from the realtor who will be listing your home for sale. The Net Sheet should list all the costs associated with the sale and show the net funds you will receive when the sale closes.

Consult with your Financial Planner or Certified Mortgage Planner and CPA to determine any gaps in your financial and tax planning.

Allow sufficient time to review mortgage options that balance your downpayment, income tax deductions, monthly cash-flow and financial goals before you are caught up in the emotional excitement of buying a new home.