Some loans, usually non-government loans, have a pre-payment penalty. A pre-payment penalty means that if you pay off your mortgage too quickly—typically within the first five years—there is a penalty. If you are unsure if this applies to you, track down your paperwork and see if you have a “pre-payment penalty” or “pre-payment rider” attached to your loan. If you do, that section of the paperwork should outline the terms and conditions surrounding it. Sometimes, there is also a penalty for settling the loan within a set period, regardless of the circumstances. Other times, there is only a penalty for specific situations. FHA, VA, and USDA loans never have a pre-payment penalty, but other non-government (or “conventional”) loans often do. This penalty can impact your bottom line, so it is important to know if you have a pre-payment penalty and what its terms are.
Holding Costs = $ _________________
Holding costs are the expenses that you still incur while you wait for your house to sell. Most real estate experts suggest you will need to pay about 4-6 months of payments even after you have listed your house. Some of these costs include: • Monthly mortgage payments • Monthly taxes and insurance • Utility bills: electricity, water, gas, trash, etc. • Maintenance: lawn care or snow removal and the like • Pest control Research statistics from Realtor.com indicate that nationally, homes are on the market for an average of about 86 days. Looking at your area’s average days on market, or their “inventory age,” gives you a good idea of how long your house might stay on the market before a sale actually goes through. This information is accessible either through Realtor.com or through Zillow.com. 20
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