What to Do with the Profit from Your Home
You're probably looking forward to thousands of dollars in profit when you sell your home—especially if you're selling during a seller's market. But what do you do with that check once you get it?
Use it for a down payment
Depending on how much you made from selling your house and how much your new one costs, you might end up using the entire profit to fund your new home. That might feel like you're losing out, but remember, if you put $50,000 down a house it's not wasted money. It means you'll have $50,000 in home equity right away. That's money that you can tap into for a home equity loan if you ever need it!
If you plan on using your entire profit for a new down payment, just make sure you accounted for any taxes you need to pay on the sale of your house.
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Pay down debt
If you still have nagging student loans, credit card debt, or car loans this might be the perfect opportunity to pay them off and start over debt-free (with the exception of your mortgage).
When it comes to investing your profit you have lots of options. You could contribute catch up payments on your 401(k), open a small business, or buy some stocks. This could be a great time to finally call that financial advisor you've been wanting to talk to so you can figure out the best investment for your situation.
Even if you're still deciding what to do with the money, you can always put it in a money market account to grow interest while you decide. That type of account is usually low-risk with easy access to your money, so it's generally considered safe if you might need the money soon.
Renovate your new house
Real estate professionals have always said it's a good idea to buy the worst house in the best neighborhood. If you're willing to put a little sweat equity into the home, you'll end up with a beautiful house that would normally have been way above your budget. You have the added benefit of being able to renovate to your personal tastes and build up some serious equity along the way.
It's probably not the best idea, but you could always go on a big splurge after you sell a home. Buy that Porche you've always dreamed of, fill your closet with fancy shoes and bags, or go on a trip around the world.
Selling your home is probably one of the biggest single profits you'll make, so be sure to think very carefully about what you want to do with it. After all, that's what you've been banking on all these years, right?