Hot Housing Market and the Dilemma to Sell or Refinance

A recent CNN Money article raises an interesting dilemma some home owners are facing. The problem--there are housing markets where you could sell your home comparatively quickly, but the cost of buying a replacement home in the same area may be too high.

According to the Money article titled, “I’m Too Afraid To Sell My Home”, buying a home in some of these area means paying a lot up front; “...the competition for the homes that are available is so intense that buyers need to bring plenty of cash to the table. In fact, all-cash deals hit a record 43% of home sales in the first quarter of this year”

The article’s advice? Cover yourself by adding a clause in the sale contract. “One way sellers can protect themselves is to make the sale of their home contingent upon their ability to find another one to move into. Patrick Matson and his fiance, Margarita Munoz, insisted on such a clause when they put their Anaheim, Calif. home up for sale. Up until last Friday they had an offer on their home, but their own search did not go well.” Having the protection of that contingency clause in the contract may have saved that couple from having to rent instead of own.

But there’s another alternative some borrowers may wish to consider--refinancing instead of moving. Anyone interested in a change of home could contemplate getting cash out refinancing to do home improvements, add a garage or a bedroom or other modifications to the property that could make it more attractive to stay instead of sell.

One reason some borrowers sell and move on is because they’ve outgrown the home. Could you refinance and add that extra bedroom? Another reason to sell is simply to trade up to a nicer property. Could refinancing bring you the cash you need to install upgrades and fixes to your current home instead?

It’s a good option and with mortgage rates at incredible lows at the time of this writing, there may not be a better time all year to consider your choices in this area even if you don’t live in a housing market “too scary to sell in”.

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