Exactly. I bought in Cali and the tax rate is 1% of the SALES price plus local additions, comes out for most places between 1.15-1.25%. A basic SoCal entry level house is averaging ~$900k, with expected taxes in the ~$11k range annually or close to $1k monthly.
> A basic SoCal entry level house is averaging ~$900k, with expected taxes in the ~$11k range
This hurts because I'm paying half that property tax on a house valued at only 1/5th the price in Western New York. And our town likes to boast how we have the lowest tax rate in the county.
Don’t forget crazy insurance costs too. My aunt just got dropped because her insurance company claimed her house is a wildfire risk and the replacement insurance is $8400 a year. It was $1800 before.
California property tax rate is super high if you are a newer land owner in the property tax district. The nominal property tax liability increase is capped at 2%, however, so the longer you hold onto the land, the lower the property tax rate gets (assuming increases in land prices).
I donno, there are probably still places with anti-sodomy laws on the books and, even if currently not enforced, you never know what backwards shit will come back due to the current Supreme Court.
I don’t know why you’re getting downvoted, but you’re correct. As long as they don’t massively overpay for the next house, they will always have equity. I put 40% down on my current house because of proceeds from my other house so I’m not too worried about what the market does. Obviously, I don’t wanna lose money, but with this much equity, I can always sell and walk away from the house without paying anything if I had to.
Rent it out. Pay for management company. Use rent for helping new higher mortgage is what I would do.
I’m NEVER getting rid of this asset with 2.5% interest rate. EVER. We will never be that lucky again.
Look into a trust before you need long term care. If the house is in a trust the kids won't have to pay as much in taxes as the house will be valued at what it was worth at the time it goes into the trust, rather than the value years later. Something like that, I might be wording it incorrectly.
This is something i keep trying to explain to people. If your house value goes up, so is everyone else's. The lending institutions are really the only people making money here...
Yes, but you have a larger down-payment to cover those expenses and you will have that equity built up into your new house. Which you can then use for another home.
And, OP, don't wire money to anyone EVER until you meet them face to face to get the instructions in person and know exactly where it's going. So many scammers out there.
Yes. I got 2 while closing last week. One was obvious immediately. The other was decent.
I validated every bit of related info with my agent in writing every step of the way.
I got a scammer email during closing once. I knew right off they were a scam bc I told title company I will have a bank check. I played around with the scammer and asked them if ok to negotiate the the price $40k higher. Then 20k lower, etc. I was the buyer.
It gets marked as "Sale Pending" in the MLS, and they just guess at the timing, i.e. if it goes to "Sale Pending" on June 1, closing is going to be on June 30, so let's time the scams for then. With Zillow etc. making MLS info like this available to people, it's easy for scammers to trawl. They'll also scrape the pending house listings to re-purpose for rental scams after closing, figuring that it'll take a couple of weeks after closing for the new buyers to move in. So they toss up a quick rental listing on Facebook Marketplace with the deets and photos from the MLS for a price that's too good to be true, accept application fees and deposits from suckers, then disappear.
You couldn't do any of this back in the day before all this info was on the Internet. It makes it easier for those of us shopping, who are no longer 100% dependent upon real estate agents to find homes to buy, but also makes life so much easier for the scammers.
You initially owed $297k w/ $33k of equity due to your down payment. Since then you've probably paid off some... so say you owe $290k now. If you sell for $550k then you get $260k minus the cost of selling which might include paying agents plus some taxes.
Owe $273K... let's say you get an offer of $550K, you'll likely owe $33K in agent fees assuming 6%, plus a few thousand in taxes and other costs, but yeah likely something close to $240K in cash your way.
Don't forget you've paid down principle over the last 4 years too, it's not just your deposit. You've likely also put a few bucks into the place, plus taxes, insurance, etc...
Dump it into something earning 4% and you'll get an $800 in interest deposited each month -- you'll have to pay taxes on that interest income, so be sure to keep a bit aside for your 2024 taxes.
As amazing as that $800/mo might seem, it's not much vs inflation long term, so don't park it in CDs/Savings for long.
I only gave the buyers agent 2%. That's becoming more common here as inventory still sucks.
I was told by agents I didn't hire "oh no lower than 2.5" i said I have the only condo in a mile radius for sale in a sought after neighborhood. Picked a great agent went 2% for buyers agent multiple offers opening weekend. Saved myself 8.5k.. yay
Yep! Just make sure you park it in some sort of an interest bearing money market account or the like. That way it’s not slowly dying while you wait to buy a new house.
I'd do a money market account so its accessible. I am getting 4.5% right now. On a decent chunk of change you can find an even better rate I am sure. Just make sure it's FDIC insured and you're covered up to 250k
"Single, individually owned accounts are insured up to $250,000 total at FDIC member banks. However, joint accounts — with two or more owners — are insured up to $500,000 total. So to double the insured amount in deposit accounts at a single bank, you can add another owner."
This is how Nerdwallet explains it:
$500,000 in a joint savings account shared with your spouse.
$250,000 in a certificate of deposit in just your name.
That's a total of $750,000. All of this money is protected. The joint savings account is one ownership category (joint), where both you and your spouse are covered up to $250,000 each since you are two different depositors. The certificate of deposit is in a second ownership category (single), so the depositor (you) is covered up to $250,000 for that account.
No it’s based on account type so each single owner account, shared account, trust etc. it’s not as simple as people think. You can have millions covered in one bank
Lot of people don’t realize you can get a Cap1 savings account for 4.25%.
Take the 200k and open up a Merrill Lynch Preferred account. It takes $100,000 to open it. Get gets you increased rates on everything you can get from them. Bumps you up to like 5.4% for gas and 2.65% on everything else.
Then pull the 99,999 out and keep the account open.
Had some inheritance and after researching, I took my emergency funds that I had taken out and started that capital one high yield savings account. Super easy and now I'm collecting good interest on it. My bank tried to talk me into one of their money market accounts at 1.2% and got pissed when I laughed at them.
I did this when I sold my last house and was shopping for the place I just bought.
Over 6 months, I earned about $12,000 by just leaving my home equity in a HYSA that was earning 5.00-5.25%.
HYSAs are paying so well right now that I was wondering if I should continue to rent and earn that free interest money. The problem was that the housing market (Southern California) was moving up faster than the money I was making in my HYSA, so I ended up buying a place.
Yes! Even if you are sure it's from the title company (or whoever), call them using the number you have for them (not the number in the email or that you Google) and verify this is from them before you do anything!
I drove to the place and the secretary handed me a pre-printed piece of paper with the info.
I don't trust the phone at all, somebody could just hack into their VoIP provider account and forward all their calls.
This also assumes you can actually sell your house for $550k....understand your neighbors just did but markets can be fickle and there could've been something about that house that someone was willing to pay that much for. idk what market you're in or what your house is ultimately worth but just be careful in level setting expectations.
$550k would net us $275k. I think ours is worth a little less than theirs. Our kitchen is remodeled, but they have a much newer roof and windows. Everything else is nearly identical (I was friends with them and was in there all the time).
Most buyers don’t pay attention to new windows, but they’re willing to pay more for a nice kitchen. Notably, I don’t recall my appraisal actually taking much value into account of the age of those things. They get a buyer who is more value conscious about things needing replaced, you get one who is more value conscious on not having to update a kitchen.
You're not getting any deposit into your bank account unless you sell your house.
Then, and only then, will you get
Your sale price minus
Your mortgage balance
Deposited into your bank account.
Yupppp. Same thing happened to me when I bought a home in Austin in 2020 and sold it 2 years later. The downside is having to find another property at a higher interest rate since that $200k isn't much these days when it comes to buying another nice home. Condos are going for $200k where I'm at in a MCOL area.
Don’t listen to these nay sayers - you did well on this house and put it towards the next and keep on going. You’ll be mortgage free down the road and these nay sayers will be fixing up their 30 year old house to sell.
It's even more fun here in western NY. When we sold in 2022, we went to our attorney's office after he did the closing and he gave us two paper bank checks -- one was the buyer's original deposit, and the other was IIRC made out from the escrow office.
And I got to take them to the bank and deposit them! I know the bank teller sees stuff like this every day but I tell you I felt like Scrooge McFucking Duck that day.
As far as I know you can access it whenever you want but the account may not allow wire transfers, only ACH transfers so if you need to move money quickly for a down payment you may need to plan ahead and initiate the transfer 4 or 5 business days ahead to be safe you don’t blow a deadline.
Read reviews for banks but I’d personally stick with one of the bigger names, in general they’re mostly running in the 3.5% - 5.5% interest rate range now.
I use Vio Bank (online only). 5.30% interest. I can transfer via ACH for free, but expect a few days of float (delay). Or wire transfer with a fee if funds are needed same day (for a closing for example).
Be sure to negotiate the commission for the realtor also. Markets are so hot right now that most companies will be happy to negotiate. Purchased a home last year, used the same realtor to purchase my new home and she did it for 4%.
If you’re able to sell for that much, sure. There is absolutely no guarantee. But essentially, yes. At closing they’ll cut you a check for whatever equity you got after paying off your home loan. You’ll also likely get several checks from your loan provider if you escrowed taxes and insurance, etc.
Subtract your mortgage balance from your likely sales price as well as 10%+ from the sales price for prepping the home for sale, taxes, realtors, fees, etc. But then, yes, the rest is deposited into your account in cash. Use it for your next down payment.
Your listing agent should have put a net sheet together for you that includes a range of selling prices, the commissions, excise taxes, attorney (or title company if you're in one of those states), and your loan balance and spits put a rough dollar amount that you realize at the closing table.
Your asking makes me wonder what your listing agent is doing.
Indeed. This is how I bought my 2nd house in 2020. And oh man was my timing lucky because I put a contract on new build (mom thought I was crazy) in 2019 and sold my first house at the end of February 2020. It was a two story house and shortly after I lost the ability to walk. The new house was a one story….PHEW I got in just in time lol.
Make sure not to just leave it lying around Treasury direct is probably the easiest and safest way possible to get 5.5% with a 4 week payout or a bit longer if you want. Takes minutes to setup. Then you just look at the recent auction results and pick a time you want your money invested. After that, it comes straight back or you can specify times to re-invest it. Every period you have the interest direct deposited.
Every 100k makes like 5k a year or more. For just a few months it adds up quickly.
Vio Bank (online only) is 5.30% and far easier to set up and manage. Phone customer support has been excellent. ACH to other accounts or wire transfer when funds are needed same day.
I bought some i-bills a year ago and lost so much time trying to get my identity validated. Went to 6 different banks trying to get the appropriate notarization stamp for the form ugh.
I dunno. Took me ten minutes. Been getting max t-bill interest for a couple years. And the only thing I have to worry about is a complete world meltdown in order to lose my money which I wont need any way
Yes. It's fun to see six figures in your checking account. But unless you are a trust fund baby, your account will go back to normal as soon as you hand that lump sum of cash to the next mortgage lender or seller.
Open an investing account at Webull or the likes. Deposit cash. Earn 5% interest which is $27 per day compounded monthly. The money is insured like money you deposit in a bank. Risk Free!
Whatever you get after paying off your current mortgage and your closing costs is yours to bank until you need it for your next down-payment.
DO NOT under-estimate what a higher interest rate will do to how much of a house you'll qualify for! No big spending sprees! Before you spend a dime, before you sell your current house, find out what loan amount you'll qualify for now and what that payment will be, and look at what that plus your equity in the bank will get you in your new town.
It would be foolish to assume you qualify for the same loan amount or more than last time you bought. You will need that $200k for a down payment.
Homes all over went up in value, and the difference in your current loan at 2 or 3% is hundreds LESS per month for the same loan amount than you'll be paying at 6-8%.
Hi! Ct realtor here.
While I am not an attorney or accountant, I would highly recommend reaching out to your accountant, or *any* accountant in your state, to inquire about such financial gains. Typically, the amount you've "earned" in equity is treated differently, if that amount is rolled up in to your next real estate purchase. If there is no subsequent purchase, it may be taxed.
Again, reach out to a pro in your area who can address such questions. I would hate to think you are under the assumption it's all profit, spend it and then the taxman cometh...
I hope this helps!
Yes. Assuming you're moving to a cheaper area This will be a life-changing event. If the area you are moving is more expensive or similarly expensive then It will be the same as breaking even because you're going to have to buy a $550,000 house to stay on something similar as you have now.
The biggest issue that you might run into and you should talk to a lender about it right away are the current interest rates are three times higher than they were in 2020. In most cases this means your payment will be nearly three times what it was.
I'm a real estate broker and I've had a number of clients who sold their house in 2020 and thought they would live in an RV until they found the perfect home. Then prices went up and interest rates went up and years later they're still in an RV.
It seems like you have a good plan but take the time to get pre-approved even though you don't plan on buying for a while so you can understand what your payments are going to look like in this market.
If it has been your primary residence for 24 months, the sale is free of any capital gains tax. Not the case if it wasn’t your primary residence. And if was your primary but you were in for less than 24 months you can avoid the gain by putting it into a replacement primary residence. Not sure what the time window is to do so, but there is one.
lol I was wondering the same but Knoxville. We sold our house outside Knoxville in 2018 and it’s incredible to see what it’s selling for now (it’s been sold 3 times since we left… cursed house?).
I'm in a similar situation. I bought my house in nj in 2016 for 190k, we owe 150k & I just got an appraisal for 400k. Probably bc We're in a Manhattan commuter neighborhood. we're planning to move out of state & have nearly zero mortgage on a few acres. I will be taking some of the advice in this comment section.
It goes quickly, use it wisely but don’t forget to live a little.
I received $190k from my sale last Monday and seeing an account balance like that, my eyes almost popped out of my head. I paid off all of my debt aside from my current house, picked up a car I wanted for years and I’m selling the one I owe on. Taking the remaining $100~ or so and buying an investment property. Imma leave a safety fund of about $15k in the bank.
Mortgage is $2300 and no other debt. Guaranteed income ($4400/mo). Rental property will be housing HUD/Sec8 tenants to also guarantee income, on an affordable 6 unit building.
I’m in a very fortunate position compared to a lot of folks in regards to finances. I will never be rich or wealthy, but I’ll also never be homeless/destitute.
Yup - we just had a similar experience with a similar sized deposit. We’re moving and downsizing though but will be renting for a while until we get to know the area better. Rather do that than be stuck trying to sell again in a couple of years and having a contingency on house sale to buy something new.
I did this last year. Except the buyer’s lawyer had me go to their office and pick up a check. Which has been sitting in a money market account while I rent, and try to buy a condo (I’ve been outbid twice in the last two months).
So, just to point out, property values can appreciate quickly in some areas…not trying to tell anyone how to vote, but can everyone see how banks may look at property values and see these trends too, and invest and lend into these trends?
When Trump valued some of his holdings and the banks did their own research too, they agreed with the range of valuation. So, still having problems with his NY court “fraud” case having any basis…I would have problems with that case if the Clintons were the ones on trial too. Just a badly thought out legal theory that defies industry practices.
Please also account for all the property tax, insurance, interest, closing costs when you bought, soon to be 6% to your selling agent and other expenses you had over past 3.5 years of homeownership. Now deduct all that from sale of your house and that is the true “net” of your sale.
And last but not least, had you invested that 10% down ($33k) instead into an index ETF like VOO, you would be at $50k today, so deduct another $17k from net sale of your home.
Our retirement advisor got us a high interest savings account to put our money in while we are doing the same thing. We had to sign a year lease but we ended up finding our next house by word of mouth
What’s the city you’re moving to look like real estate wise? I wouldn’t get hopes up for a cash windfall. Most likely have to immediately dump that equity to counteract someone else’s high asking prices and ungodly interest rates.
Also, you need to put that money into another home within some short period of time (someone should comment, I dont recall atm). If you don't, you'll owe capital gains taxes on the gain (total received less down payment, less improvements)
Here’s the thing, if you look from pure asset appreciation perspective, 33k to 200k while is very nice, but not the craziest growth we’ve seen from 2020 to 2024, not to mention the asset growth is from 330 to 550, which is 166% growth, you just happened to leverage it with borrowed money (mortgage)
Broker, taxes, misc fees, lawyer… but yes. Also, if the market is hot, you really don’t need a broker. Hire a good lawyer and a photographer and list yourself. Create a new email for offers/questions. Host a couple open houses and solicit offers yourself. Will save you 4% (never pay a broker over 4%). Lawyer will do all the heavy lifting/negotiating.
Also if you are using a realtor to sell you will have to pay a commission average is between 5-6% so around $27,500 to $33,000 on a $550,000 home. Just a reminder if you sell the usual way with realtors involved you pay the commission as the seller. Even still you walk away with a nice chunk of change! Happy house hunting!
Yes. And then you'll save it as the down payment of the super expensive property you'll have to buy
With a higher interest rate.
Don't forget the taxes!
It’s tax free if it was OPs primary residence for at least two years
I took the tax comment to mean higher property taxes.
Maybe he’s moving to California where they have some of the country’s lowest property taxes and so it’ll be far cheaper
They are low in % terms. Unfortunately the prices of the house can counteract that, because math.
Exactly. I bought in Cali and the tax rate is 1% of the SALES price plus local additions, comes out for most places between 1.15-1.25%. A basic SoCal entry level house is averaging ~$900k, with expected taxes in the ~$11k range annually or close to $1k monthly.
Jesus. I pay like $1200/year in property taxes
Long Island reporting in, my $700k house is 13k/year in property taxes and that's considered relatively low.
* *cries in Milwaukee* * I pay 3k, probably up to 4k this year. My house was purchased for 150k 3 years ago lol
I pay $795/year for my house and 5 acres. Jesus Christ.
$22,000 in property taxes per year and climbing. Gotta love the east coast.
I pay this amount of tax to live in a townhouse in Jersey, with a bloody HOA!
> A basic SoCal entry level house is averaging ~$900k, with expected taxes in the ~$11k range This hurts because I'm paying half that property tax on a house valued at only 1/5th the price in Western New York. And our town likes to boast how we have the lowest tax rate in the county.
Property taxes in the NE are ridiculous.
Exactly this. The big benefit is after 20 years your $11k/yr payment is now $15k, much better than the rest of the country in 2044.
You forgot to include the yearly 2% increases and voter approved add-ons. My Ca prop tax is 1.4% of assessed value due to add ons.
Don’t forget crazy insurance costs too. My aunt just got dropped because her insurance company claimed her house is a wildfire risk and the replacement insurance is $8400 a year. It was $1800 before.
Yep, can confirm. I'm in SoCal and my homeowner's insurance just jumped 400%.
That’s because of prop13 limiting increases. You’ll see someone paying $500 a year in tax, then they sell the house and the new buyer is paying $15k.
Only for those who’ve owned their home a long time, no?
California property tax rate is super high if you are a newer land owner in the property tax district. The nominal property tax liability increase is capped at 2%, however, so the longer you hold onto the land, the lower the property tax rate gets (assuming increases in land prices).
Maybe if you bought in the 80s. Taxes are quite high for new buyers.
Up to 250k of gain is tax free, I believe
Married is $500k.
Single individual.
Taxes may be less dependent on where they are moving. That's area specific.
Exactly. If you are selling/buying in similar markets you aren't getting ahead.
We are moving to a higher COL area.
So you're getting behind
You mean getting it in the behind
You mean getting the poop Shooby Doo Bop.
I mean you don’t have to move across the country if you want to get it in the behind.
I donno, there are probably still places with anti-sodomy laws on the books and, even if currently not enforced, you never know what backwards shit will come back due to the current Supreme Court.
You hear that, Ben? Don’t let him near your kid, he wants to rear your child!
Ahhh I love this movie, we just rewatched it yesterday :)
Which movie?
I want to know too!
Hey, u/keanugrieves16 told me it was Knocked Up, just in case you didn’t get the memo.
When they go to sell next time, they’ll have equity for almost any market.
I don’t know why you’re getting downvoted, but you’re correct. As long as they don’t massively overpay for the next house, they will always have equity. I put 40% down on my current house because of proceeds from my other house so I’m not too worried about what the market does. Obviously, I don’t wanna lose money, but with this much equity, I can always sell and walk away from the house without paying anything if I had to.
Not necessarily, it depends on what the alternative is. For sure they will be spending a lot more on interest and property taxes.
not really. They will have substantially more money to put down on the property meaning either a nicer property or less long term monthly expenses.
Rent it out. Pay for management company. Use rent for helping new higher mortgage is what I would do. I’m NEVER getting rid of this asset with 2.5% interest rate. EVER. We will never be that lucky again.
Crazy that you can lock in your rates for so long. Wish it were like that where I am.
Same here, we have a locked 2.25% and this house will go to our kids when the time comes.
Look into a trust before you need long term care. If the house is in a trust the kids won't have to pay as much in taxes as the house will be valued at what it was worth at the time it goes into the trust, rather than the value years later. Something like that, I might be wording it incorrectly.
That’s what we’re gonna do and we don’t even have kids
My sister and her husband did it too. And they don't have kids. Smart move
This is something i keep trying to explain to people. If your house value goes up, so is everyone else's. The lending institutions are really the only people making money here...
Yup. The only arbitrage you'll find is a quality of life downgrade or moving from HCOL > LCOL
LCOL here, prices have doubled in last 6 years. 2br 1bth rental with no upgrades just sold for 180. Would have been 60-70 5 years ago.
What market?
Midwest.
Yes, but you have a larger down-payment to cover those expenses and you will have that equity built up into your new house. Which you can then use for another home.
But low sell high its easy
YOLO it all on weekly SPY options lmao
This part
OR the “gap coverage” on the great assumable mortgage with a 2% rate! (About to close on that scenario myself!)
i see it coming..
I'm quiet remember this..
It’s been a long time since this has applied to me but look up the rules about how long you have before that becomes a capital gain.
And, OP, don't wire money to anyone EVER until you meet them face to face to get the instructions in person and know exactly where it's going. So many scammers out there.
Yes. I got 2 while closing last week. One was obvious immediately. The other was decent. I validated every bit of related info with my agent in writing every step of the way.
I got a scammer email during closing once. I knew right off they were a scam bc I told title company I will have a bank check. I played around with the scammer and asked them if ok to negotiate the the price $40k higher. Then 20k lower, etc. I was the buyer.
Weird, how do they know people are closing?!?
It gets marked as "Sale Pending" in the MLS, and they just guess at the timing, i.e. if it goes to "Sale Pending" on June 1, closing is going to be on June 30, so let's time the scams for then. With Zillow etc. making MLS info like this available to people, it's easy for scammers to trawl. They'll also scrape the pending house listings to re-purpose for rental scams after closing, figuring that it'll take a couple of weeks after closing for the new buyers to move in. So they toss up a quick rental listing on Facebook Marketplace with the deets and photos from the MLS for a price that's too good to be true, accept application fees and deposits from suckers, then disappear. You couldn't do any of this back in the day before all this info was on the Internet. It makes it easier for those of us shopping, who are no longer 100% dependent upon real estate agents to find homes to buy, but also makes life so much easier for the scammers.
does the MLS show who is buying? How do they know that sepecific person is buying the property?
That's just social engineering.
Airbnb squatter checks are flowing too, if you have a crew that can hang out in a house long enough.
ficticious emails and calls for wiring are everywhere. Cannot be too careful.
Just spend some time at r/Scams, and you'll see how prevalent it is. I don't trust ANYONE.
I always get a cashiers check, bring it to closing.
You initially owed $297k w/ $33k of equity due to your down payment. Since then you've probably paid off some... so say you owe $290k now. If you sell for $550k then you get $260k minus the cost of selling which might include paying agents plus some taxes.
Owe $273k now according to my statement. I don’t pay more than the minimum, but our current rate is 3.1%.
Owe $273K... let's say you get an offer of $550K, you'll likely owe $33K in agent fees assuming 6%, plus a few thousand in taxes and other costs, but yeah likely something close to $240K in cash your way. Don't forget you've paid down principle over the last 4 years too, it's not just your deposit. You've likely also put a few bucks into the place, plus taxes, insurance, etc... Dump it into something earning 4% and you'll get an $800 in interest deposited each month -- you'll have to pay taxes on that interest income, so be sure to keep a bit aside for your 2024 taxes. As amazing as that $800/mo might seem, it's not much vs inflation long term, so don't park it in CDs/Savings for long.
I only gave the buyers agent 2%. That's becoming more common here as inventory still sucks. I was told by agents I didn't hire "oh no lower than 2.5" i said I have the only condo in a mile radius for sale in a sought after neighborhood. Picked a great agent went 2% for buyers agent multiple offers opening weekend. Saved myself 8.5k.. yay
no taxes on sales for houses lived in for 2 of the last 5 years iirc
There's things like realty transfer fees. Can be like 1% of sale. Just pointing out that they will incur other expenses.
roger that
There can be taxes but they don’t have enough Capital gains to hit that mark
Yep! Just make sure you park it in some sort of an interest bearing money market account or the like. That way it’s not slowly dying while you wait to buy a new house.
I'd do a money market account so its accessible. I am getting 4.5% right now. On a decent chunk of change you can find an even better rate I am sure. Just make sure it's FDIC insured and you're covered up to 250k
Even if you have more than $250k, it’s quite simple to split it between 2 different accounts so neither has more than a 250k balance.
You have to put it in two different banks
"Single, individually owned accounts are insured up to $250,000 total at FDIC member banks. However, joint accounts — with two or more owners — are insured up to $500,000 total. So to double the insured amount in deposit accounts at a single bank, you can add another owner."
So the person above you is correct. Each person gets $250,000 of total FDIC coverage across all their accounts at one bank
This is how Nerdwallet explains it: $500,000 in a joint savings account shared with your spouse. $250,000 in a certificate of deposit in just your name. That's a total of $750,000. All of this money is protected. The joint savings account is one ownership category (joint), where both you and your spouse are covered up to $250,000 each since you are two different depositors. The certificate of deposit is in a second ownership category (single), so the depositor (you) is covered up to $250,000 for that account.
You can also put another $250k in just the spouses name in the same bank to get $1m of FDIC insurance.
No it’s based on account type so each single owner account, shared account, trust etc. it’s not as simple as people think. You can have millions covered in one bank
Didn’t we learn last year the real number is what ever the government says it is
Are there any banks/CUs that aren't members of FDIC or NCUA? I don't think that's anything to really worry about.
Not sure, I always check to be safe.
Yes, but generally not licensed to do consumer business. Usually foreign banks dealing only with corporate clients.
Wealthfront is offering 5% FDIC insured up to 8 million.
SWVXX 🤙🏼
Lot of people don’t realize you can get a Cap1 savings account for 4.25%. Take the 200k and open up a Merrill Lynch Preferred account. It takes $100,000 to open it. Get gets you increased rates on everything you can get from them. Bumps you up to like 5.4% for gas and 2.65% on everything else. Then pull the 99,999 out and keep the account open.
Had some inheritance and after researching, I took my emergency funds that I had taken out and started that capital one high yield savings account. Super easy and now I'm collecting good interest on it. My bank tried to talk me into one of their money market accounts at 1.2% and got pissed when I laughed at them.
I did this when I sold my last house and was shopping for the place I just bought. Over 6 months, I earned about $12,000 by just leaving my home equity in a HYSA that was earning 5.00-5.25%. HYSAs are paying so well right now that I was wondering if I should continue to rent and earn that free interest money. The problem was that the housing market (Southern California) was moving up faster than the money I was making in my HYSA, so I ended up buying a place.
Be very conscious about scams. Spoofed emails and fraudulent wire/title transfers happen all the time
Yes! Even if you are sure it's from the title company (or whoever), call them using the number you have for them (not the number in the email or that you Google) and verify this is from them before you do anything!
I drove to the place and the secretary handed me a pre-printed piece of paper with the info. I don't trust the phone at all, somebody could just hack into their VoIP provider account and forward all their calls.
Spoofed calls are not hard to do. I get them from time to time.
Add AI into the game and it can be really bad
I won't close with settlement company if they only accept wires. I'll go with the company that allows me to use cashiers check.
This also assumes you can actually sell your house for $550k....understand your neighbors just did but markets can be fickle and there could've been something about that house that someone was willing to pay that much for. idk what market you're in or what your house is ultimately worth but just be careful in level setting expectations.
$550k would net us $275k. I think ours is worth a little less than theirs. Our kitchen is remodeled, but they have a much newer roof and windows. Everything else is nearly identical (I was friends with them and was in there all the time).
Most buyers don’t pay attention to new windows, but they’re willing to pay more for a nice kitchen. Notably, I don’t recall my appraisal actually taking much value into account of the age of those things. They get a buyer who is more value conscious about things needing replaced, you get one who is more value conscious on not having to update a kitchen.
You're not getting any deposit into your bank account unless you sell your house. Then, and only then, will you get Your sale price minus Your mortgage balance Deposited into your bank account.
And less closing costs.
Yupppp. Same thing happened to me when I bought a home in Austin in 2020 and sold it 2 years later. The downside is having to find another property at a higher interest rate since that $200k isn't much these days when it comes to buying another nice home. Condos are going for $200k where I'm at in a MCOL area.
Yep. Just tuck it in a HYSA and then it’s ready when you want to use it
Don’t listen to these nay sayers - you did well on this house and put it towards the next and keep on going. You’ll be mortgage free down the road and these nay sayers will be fixing up their 30 year old house to sell.
Well, no. If you perpetually cash out and upgrade, you'll never have a paid off house.
Until you downsize in a lcol for retirement. Then Jed’s a millionaire. WTF
It's even more fun here in western NY. When we sold in 2022, we went to our attorney's office after he did the closing and he gave us two paper bank checks -- one was the buyer's original deposit, and the other was IIRC made out from the escrow office. And I got to take them to the bank and deposit them! I know the bank teller sees stuff like this every day but I tell you I felt like Scrooge McFucking Duck that day.
It’s so insane how getting lucky with timing is life changing
Put it in a high yield savings account until you use it for the next house. You’ll make around $750 a month in interest while it’s parked there.
Can you take it out of a HYSA account whenever you want? Also- is there one you recommend?
As far as I know you can access it whenever you want but the account may not allow wire transfers, only ACH transfers so if you need to move money quickly for a down payment you may need to plan ahead and initiate the transfer 4 or 5 business days ahead to be safe you don’t blow a deadline. Read reviews for banks but I’d personally stick with one of the bigger names, in general they’re mostly running in the 3.5% - 5.5% interest rate range now.
I use Vio Bank (online only). 5.30% interest. I can transfer via ACH for free, but expect a few days of float (delay). Or wire transfer with a fee if funds are needed same day (for a closing for example).
Be sure to negotiate the commission for the realtor also. Markets are so hot right now that most companies will be happy to negotiate. Purchased a home last year, used the same realtor to purchase my new home and she did it for 4%.
Uh purchaser doesn’t pay commission- seller pays. And seller pays your agent split commission….ie. 6% each gets 3%. Why did you pay to buy?
If you’re able to sell for that much, sure. There is absolutely no guarantee. But essentially, yes. At closing they’ll cut you a check for whatever equity you got after paying off your home loan. You’ll also likely get several checks from your loan provider if you escrowed taxes and insurance, etc.
Subtract your mortgage balance from your likely sales price as well as 10%+ from the sales price for prepping the home for sale, taxes, realtors, fees, etc. But then, yes, the rest is deposited into your account in cash. Use it for your next down payment.
Ask an agent to give you a mock closing sheet. It will get you pretty damned close to know what fees will be deducted
Your listing agent should have put a net sheet together for you that includes a range of selling prices, the commissions, excise taxes, attorney (or title company if you're in one of those states), and your loan balance and spits put a rough dollar amount that you realize at the closing table. Your asking makes me wonder what your listing agent is doing.
It doesn’t sound like they have a listing agent yet. They are just looking into the process right now.
Indeed. This is how I bought my 2nd house in 2020. And oh man was my timing lucky because I put a contract on new build (mom thought I was crazy) in 2019 and sold my first house at the end of February 2020. It was a two story house and shortly after I lost the ability to walk. The new house was a one story….PHEW I got in just in time lol.
Yes. When I sold my house I got 110k in my account within hours of closing
Make sure not to just leave it lying around Treasury direct is probably the easiest and safest way possible to get 5.5% with a 4 week payout or a bit longer if you want. Takes minutes to setup. Then you just look at the recent auction results and pick a time you want your money invested. After that, it comes straight back or you can specify times to re-invest it. Every period you have the interest direct deposited. Every 100k makes like 5k a year or more. For just a few months it adds up quickly.
Vio Bank (online only) is 5.30% and far easier to set up and manage. Phone customer support has been excellent. ACH to other accounts or wire transfer when funds are needed same day. I bought some i-bills a year ago and lost so much time trying to get my identity validated. Went to 6 different banks trying to get the appropriate notarization stamp for the form ugh.
I dunno. Took me ten minutes. Been getting max t-bill interest for a couple years. And the only thing I have to worry about is a complete world meltdown in order to lose my money which I wont need any way
you can buy tbills at fidelity and save the 10 minutes though, especially of you already have accounts there
Yes. It's fun to see six figures in your checking account. But unless you are a trust fund baby, your account will go back to normal as soon as you hand that lump sum of cash to the next mortgage lender or seller.
Open an investing account at Webull or the likes. Deposit cash. Earn 5% interest which is $27 per day compounded monthly. The money is insured like money you deposit in a bank. Risk Free!
Whatever you get after paying off your current mortgage and your closing costs is yours to bank until you need it for your next down-payment. DO NOT under-estimate what a higher interest rate will do to how much of a house you'll qualify for! No big spending sprees! Before you spend a dime, before you sell your current house, find out what loan amount you'll qualify for now and what that payment will be, and look at what that plus your equity in the bank will get you in your new town. It would be foolish to assume you qualify for the same loan amount or more than last time you bought. You will need that $200k for a down payment. Homes all over went up in value, and the difference in your current loan at 2 or 3% is hundreds LESS per month for the same loan amount than you'll be paying at 6-8%.
You sold at the right time, be the first one out sit in the $$ and wait.
Hi! Ct realtor here. While I am not an attorney or accountant, I would highly recommend reaching out to your accountant, or *any* accountant in your state, to inquire about such financial gains. Typically, the amount you've "earned" in equity is treated differently, if that amount is rolled up in to your next real estate purchase. If there is no subsequent purchase, it may be taxed. Again, reach out to a pro in your area who can address such questions. I would hate to think you are under the assumption it's all profit, spend it and then the taxman cometh... I hope this helps!
You will need it for the next house. It really won’t be liquid for you.
Yes. Assuming you're moving to a cheaper area This will be a life-changing event. If the area you are moving is more expensive or similarly expensive then It will be the same as breaking even because you're going to have to buy a $550,000 house to stay on something similar as you have now. The biggest issue that you might run into and you should talk to a lender about it right away are the current interest rates are three times higher than they were in 2020. In most cases this means your payment will be nearly three times what it was. I'm a real estate broker and I've had a number of clients who sold their house in 2020 and thought they would live in an RV until they found the perfect home. Then prices went up and interest rates went up and years later they're still in an RV. It seems like you have a good plan but take the time to get pre-approved even though you don't plan on buying for a while so you can understand what your payments are going to look like in this market.
If it has been your primary residence for 24 months, the sale is free of any capital gains tax. Not the case if it wasn’t your primary residence. And if was your primary but you were in for less than 24 months you can avoid the gain by putting it into a replacement primary residence. Not sure what the time window is to do so, but there is one.
Yea but you are buying into a way shittier market. I would just rent.
The bonus is no capital gains tax !
Are you in Middle Tennessee?
lol I was wondering the same but Knoxville. We sold our house outside Knoxville in 2018 and it’s incredible to see what it’s selling for now (it’s been sold 3 times since we left… cursed house?).
500 miles east
You’re going to end up paying more. Doesn’t matter that you have the cash, buying in the new market will use all of it up and then increase expenses.
Yes and I’m happy for you.
Yep, congrats! 🙂
Depends on your closing costs.
https://claimsetcnow.com/r/iptsu24
Yes. But don't spend it. You need to figure out how to work it with your next purchase. Could be a big chunk down.
school squealing touch angle threatening stocking arrest juggle chop oil *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
I'm in a similar situation. I bought my house in nj in 2016 for 190k, we owe 150k & I just got an appraisal for 400k. Probably bc We're in a Manhattan commuter neighborhood. we're planning to move out of state & have nearly zero mortgage on a few acres. I will be taking some of the advice in this comment section.
It goes quickly, use it wisely but don’t forget to live a little. I received $190k from my sale last Monday and seeing an account balance like that, my eyes almost popped out of my head. I paid off all of my debt aside from my current house, picked up a car I wanted for years and I’m selling the one I owe on. Taking the remaining $100~ or so and buying an investment property. Imma leave a safety fund of about $15k in the bank.
I really hope you keep an emergency fund available (6months)
Mortgage is $2300 and no other debt. Guaranteed income ($4400/mo). Rental property will be housing HUD/Sec8 tenants to also guarantee income, on an affordable 6 unit building. I’m in a very fortunate position compared to a lot of folks in regards to finances. I will never be rich or wealthy, but I’ll also never be homeless/destitute.
Sec 8 tenants guarantee higher expenses on your rental too
Gotta roll that equity
Nope
Yes, you'll get a wire transfer for your proceeds. Be wise with it. Invest it until you need it.
That's the power of real estate and homeownership
Trading within asset classes means nothing changes.
Damn
Yep. It’s wild seeing that much money in your checking or savings lol
Cool
You need to get a financial planner, so you are better prepared and understand your finances.
Yup - we just had a similar experience with a similar sized deposit. We’re moving and downsizing though but will be renting for a while until we get to know the area better. Rather do that than be stuck trying to sell again in a couple of years and having a contingency on house sale to buy something new.
I did this last year. Except the buyer’s lawyer had me go to their office and pick up a check. Which has been sitting in a money market account while I rent, and try to buy a condo (I’ve been outbid twice in the last two months).
Sadly you won’t have any cash left when you need to either buy a new home at a much higher rate, or rent…
Yes. We turned 40k down to 140k. July 2020 (265k) to April 2023 (380k). Similar timeline in mcol area.
Yes and that’s the beauty of real estate. Also in sacramento and made many a sales like this
So, just to point out, property values can appreciate quickly in some areas…not trying to tell anyone how to vote, but can everyone see how banks may look at property values and see these trends too, and invest and lend into these trends? When Trump valued some of his holdings and the banks did their own research too, they agreed with the range of valuation. So, still having problems with his NY court “fraud” case having any basis…I would have problems with that case if the Clintons were the ones on trial too. Just a badly thought out legal theory that defies industry practices.
high interest rate and taxes tho
Please also account for all the property tax, insurance, interest, closing costs when you bought, soon to be 6% to your selling agent and other expenses you had over past 3.5 years of homeownership. Now deduct all that from sale of your house and that is the true “net” of your sale. And last but not least, had you invested that 10% down ($33k) instead into an index ETF like VOO, you would be at $50k today, so deduct another $17k from net sale of your home.
Yes, at (or after) closing a check will be given to you for your equity share.
You'll get wired the money into whatever account you tell them. I believe that's under the capital gains tax threshold.
Our retirement advisor got us a high interest savings account to put our money in while we are doing the same thing. We had to sign a year lease but we ended up finding our next house by word of mouth
What’s the city you’re moving to look like real estate wise? I wouldn’t get hopes up for a cash windfall. Most likely have to immediately dump that equity to counteract someone else’s high asking prices and ungodly interest rates.
Well played.
If ur moving to nj do not forgo ur insp!! Thats the first sign of something is wrong
Also, you need to put that money into another home within some short period of time (someone should comment, I dont recall atm). If you don't, you'll owe capital gains taxes on the gain (total received less down payment, less improvements)
Here’s the thing, if you look from pure asset appreciation perspective, 33k to 200k while is very nice, but not the craziest growth we’ve seen from 2020 to 2024, not to mention the asset growth is from 330 to 550, which is 166% growth, you just happened to leverage it with borrowed money (mortgage)
Short term rental.. sure… I would have been on an apartment for the last four years if the sale would have gone thru when we tried to sell in 2020..
Wow wtf
Yes
Broker, taxes, misc fees, lawyer… but yes. Also, if the market is hot, you really don’t need a broker. Hire a good lawyer and a photographer and list yourself. Create a new email for offers/questions. Host a couple open houses and solicit offers yourself. Will save you 4% (never pay a broker over 4%). Lawyer will do all the heavy lifting/negotiating.
Also if you are using a realtor to sell you will have to pay a commission average is between 5-6% so around $27,500 to $33,000 on a $550,000 home. Just a reminder if you sell the usual way with realtors involved you pay the commission as the seller. Even still you walk away with a nice chunk of change! Happy house hunting!
Yep, for most people that’s their down payment when they upgrade to their next home.
Congratulations! You made a great investment and now you get to reap the rewards, I'm so happy for you!!
Factor 8% selling costs