Why Selling Your Current Hawaii Residence and Moving up to a Larger Home May be a Smart Move
At first thought, you might think this idea is a little far fetched. Many people seem to believe that the current real estate market is anemic at best and are only selling out of necessity (job change, move to the mainland, etc). However, let’s look at the unprecedented opportunities that the current market has presented.
Is it time to buy up??
Interest rates are at a 60 year low and today you can find many 30 year mortgages at 3.5%. You can even find 7 year balloon mortgages at 2.75% (fixed for seven years and then adjusts annually — average homeowner keeps their mortgage less than 5 years). This low interest rate environment, coupled with reduced home prices, is an anomaly that has never occurred before.
Let’s see how to take advantage of this with an example:
Let’s say you currently own a town home valued at $525,000 in today’s market (even though we know you paid $575,000 for it 4 years ago, sorry) and you have a fixed rate mortgage of $400,000 that you took out in 2008 at 5.75% (the rate in 2008). That resulted in a payment of $2,334; based on your income and debt that was a reasonable mortgage for you.
Now, if we take that same payment and calculate the mortgage at 3.5%, you find that you can now borrow $520,000. Your borrowing power has increased by $120,000 due to these historically low rates. Okay. So, now we sell your town home for $525,000 and you take your equity of $125,000 and apply it to a nice three bedroom house that is now on the market for $645,000 (when you bought your town home in 2008 this house would have cost $800,000 and was out of your price range).
You have now gotten a larger home with a greater chance at future appreciation and your monthly payment is not any higher (actually probably lower since the town home maintenance fee was probably more than the insurance you will be paying on your new three bedroom).
With the Help of a Great Realtor You Should be Able to “Buy Up”
This is a simplistic example, but on Oahu the market in the $500,000 range is quite hot (actually) and will allow you to sell and become a “choosy” buyer in the old $800,000 range, which is still soft, and with the help of a great Realtor you should be able to “BUY UP” in a market that will probably never occur again.
Think about it and call me at 808-216-7300 if you have questions, or listen to my radio show “Stage It To Sell It” every Saturday at 4 PM on AM Channel 830 where I show you how to sell your home faster and for more money.