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Once escrow has closed without a hitch and you've handed the keys over to
the new owners, you've probably written the selling process off as over. But
don't change your state of mind too fast.
In their book, "House Selling for Dummies (Hungry Minds Inc., 1999),"
authors Eric Tyson and Ray Brown lay out a laundry list of what you can do
to ultimately save yourself money and peace of mind down the road.
Tyson is a syndicated columnist and the bestselling author of Personal
Finance for Dummies. Brown is a real estate consultant and speaker.
Once you sell your house, they suggest you:
Keep copies of all the paperwork related to closing and settlement.
Although it might be tempting to run the mountain of paperwork through the
shredder or tuck it away in storage, you'll want to have it handy for April
15. When you file your taxes you'll need documentation for the expenses and
proceeds of the sale. And once you file your return, you'll want to keep the
paperwork in case you're audited.
Keep proof of improvements and prior purchases. This is for tax purposes,
too. The IRS allows you to add the cost of improvements to your home's cost
basis during the time you own the home, which is nice if you have a sizeable
capital gain. But to use this tax provision, you need to keep receipts of
everything spent on home improvement.
Put your cash in a money market fund. If you sell and then don't
immediately buy, you'll need a safe place to put your money. A money market
mutual fund offers safety and a reasonable rate of return. Money market
funds offer daily access to your money and check-writing privileges.
Stay on top of tax laws. A recently passed law allows you to exclude from
tax a significant portion of the profits from the sale of your primary
residence. Because tax laws are constantly changing, you'll want to stay on
top of tax laws to avoid losing a lot of money.
Choose your next home carefully. Scope out a variety of areas and housing
options that meet your family's needs.
Don't feel pressured. Take your time purchasing your next home; rent for
awhile if you'd like extra time or want to try an area out first before
buying.
Reevaluate your personal finances if things change. If your situation
changes before you buy another house - you get a promotion, have a baby, go
through a divorce - you'll need to rethink your finances and how much you
can afford to pay for your new house.
Think about what you need from an agent to help you buy. While the agent
who helped you sell your house might fit the bill to help you buy, you
should carefully consider whether he or she can meet your needs when buying.
Buying and selling require different skills. And, if you're moving to a new
area, you may want someone familiar with the area.
Think through your next down payment. Brown and Tyson recommend putting at
least 20 percent down on your next house in order to qualify for the best
mortgage programs. If you can make more than a 20 percent down payment,
you'll want to consider whether you can earn a high enough return if that
money was invested elsewhere. "Younger home buyers willing to take on more
investment risk should lean toward a 20-percent down payment, whereas older
home buyers who tend to invest less aggressively should opt for larger down
payments," the pair recommends.
Remember to send change of address notices. The U.S. Postal Service
recommends you complete and mail your Change of Address Order Card or
Internet form www.usps.gov/moversnet 30 days before you move.
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