Ideally, you should stay in a home for at least three to five years to reach the break-even point of your mortgage. If the answer is less than five years, you're probably better off renting. In general, it's best to buy when you have your eyes set on the horizon and are thinking about the long term. Experts largely agree that you shouldn't own it unless you plan to stay in the house for at least five years.
However, the days of buying a house and exchanging it for cash in a couple of years ended when the housing bubble burst. Nowadays, it will take a little longer to accumulate enough capital to profit from your investment. Closing and publication costs are just two considerations. This is when the five-year rule makes the most sense.
Unless you plan to pay off your principle sooner, you'll need at least five years to build up enough mortgage capital to make the sale worthwhile. We've been married for almost 41 years, raised four children and have two fully paid homes. This rule makes sense, since homeowners would actually suffer losses if they didn't live in the home they bought for five years or more. If you study real estate market patterns, you'll be better prepared to sell at an advantageous time.
Real estate agents often suggest the five-year rule when asked how long a person should live in a new home before selling it. Depending on where your home is located, buyers and sellers pay different amounts, but everyone pays something. My father plans to buy a new house for the family soon because he wants to live in a property closer to the city. And what if I drive a beater and live in a neighborhood where you're probably afraid to show your face? My brother will surely appreciate this advice because he plans to buy a house and wants the buying process to be completed before his wedding day in September.
Instead of getting a job and climbing the business ladder, saving for school and gaining some skills, you sat in your mother's basement playing computer games and, after you were kicked out, you now receive public assistance, you live in subsidized housing that plans to hate your life. I only financed $125,000 on my house, and at an interest rate of 4.8%, I married filing jointly and even adding state and property taxes, etc. Since I would only need a house near her school for less than 2 years, it would make sense for her to rent instead. Even though I didn't know the exact amount of time, they wanted to make sure the house was mine for at least five years.
In other words, you should plan to stay in your home for about seven years to have the opportunity to get a higher return on investment (ROI).
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