When you are planning to make a home purchase it is important to think ahead and determine how long you plan on staying in that home. Generally you want to stay in a newly purchased home for at least five years. This is because a home is one of the largest and most important purchases you will ever make and you want to make sure that it will be a good investment.
It is common for first time homebuyers to start out smaller and as time goes by they will begin looking for a larger home. This upgrade cycle is normal but if done too much and too quickly it can make you lose money. Buying is not always as cost effective as renting especially if you are just starting out and don’t plan to stay in the home for at least five years.
One of the first financial hits you might take in selling a home too quickly is the closing costs. You may have paid thousands of dollars at the closing table with your first home and if you decide to buy again you need to be prepared to pay these fees once again.
The second hit is the mortgage interest payments. Usually you are paying more in interest for the first few years than on the principal. If you aren’t chipping away at the principle then you might take a hit financially if you decide to sell.