Paying off a home is a monumental financial and life achievement — but it’s not the end of the road for homeowners. While you may not have to worry about mortgage payments or losing your home for financial reasons, there are still factors to think about to ensure your home is working as hard for you as you did for it. 

The path forward for every homeowner is different and there’s no one-size-fits-all approach to protect your investment. Decisions must be based on individual goals and lifestyle choices as well as current real estate market conditions that should weigh into a decision to sell, keep or leverage as an investment property. 

Here are a few questions to ask yourself to help guide your decision-making process and get the most out of your most prized possession — your home.

What are your plans for the future?

Are you interested in downsizing, relocating or do you need access to cash to pay off debts or boost other investments? If you answered yes to any of these questions then selling may be a great option. 

But selling is not the only option in order to buy your next home. For instance, if your financial situation changes, you may want to tap into your home’s equity through a home equity line of credit (HELOC)* to gain access to a sizable portion of your home’s value without selling. 

Whether selling or staying is on the table, the decision is highly personal and should be based on specific needs, wants and plans for the future. Think about where you see yourself in five, 10 or even 15 years, and go from there.

Do you want to be a landlord?

An alternative to selling your home is to turn it into a rental property. This allows you to keep the property and hold onto it while it increases in value. What’s more, renting your home is a great way for debt-free homeowners to keep their home as an investment property and rent out rooms or the entire home for positive cash flow each month. Tools like Rentometer and Zillow Rental Manager can help determine how much your home could rent for by aggregating lease prices in the area. 

In addition to the extra income, homeowners may also receive added benefits from mortgage lenders for renting out their properties. Some lenders will count a portion of your rental income (up to 75%) to help qualify you for a new loan or finance a new property. 

However, renting also comes with risks. Things like disrespectful tenants, wear and tear on the property and unexpected costs can be challenging for landlords. That’s why many hire a property management company to avoid interacting with tenants and have a go-to source for maintenance. 

Are you in a buyers’ market? 

While a buyers’ market shouldn’t dissuade you from selling your house if you need or want to, it’s worth considering the impacts of the Federal Reserve Board’s recent rate hikes on your local market. Roughly 100 of the largest housing markets in the nation are reporting a cooling effect and more favorable buyer conditions. The shift in the market means that houses are taking longer to sell, contending with price cuts and other buyer demands. 

For many sellers, this translates to fixing up their homes and making updates to get top dollar or agreeing to concede to a lower price. But if you’re planning to upgrade to a more expensive house and need a home loan, taking on new debt at a higher interest may be more cost prohibitive than just sitting tight. 

Are you in a sellers’ market?

Despite increased rates, several areas in the South, East, and Midwest are still experiencing strong sellers’ markets thanks to low inventory and high demand. A recently released Buyer-Seller Market Index report forecasts that March 2023 will likely be the best month to sell a home and the market will continue to sway favorably toward buyers in 2023. 

No matter what course of action works best for you — to buy, sell or stay put — remember to do your research, understand your local market and consult with your tax advisor prior to making any real estate moves. Determining what will be most beneficial to you and your financial situation is what it’s all about. And as always, proceed with caution and be flexible because what may work best for you today could change tomorrow.

* Subject to approval disclosure – FirstBank determines actual loan qualification only after receipt of a complete loan application and analysis of pertinent information, such as (but not limited to) credit history, income documentation, and property valuation.  Subject to approval.  Fees and restrictions may apply.  See any FirstBank location for complete details.

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