The Three Biggest Decisions When Choosing How to Sell Your Home
It’s a big decision to sell your home. And once you’ve made the decision to take the plunge, you’re faced with another, potentially even bigger decision: how to actually sell your home.
The three most common ways to sell a home are through a cash-out refinance, an outright sale, or an equity sharing agreement. Each of these has its own distinct benefits and drawbacks that you need to consider before making a decision.
A cash-out refinance is when you take out a new loan to replace your existing mortgage and receive cash back at the same time. This can be a good option if you have equity in your home and need cash for other purposes, like home improvements or debt consolidation.
One thing to keep in mind with a cash-out refinance is that it will likely extend the life of your mortgage, which means you’ll be paying interest for a longer period of time. And because you’re taking out a new loan, you’ll also have to go through the process of applying for and qualifying for a mortgage, which can be time-consuming and stressful.
An outright sale is exactly what it sounds like: you sell your home and receive the full purchase price in cash. This is generally the quickest and easiest way to sell a home, but it’s not always the most profitable.
If you need to sell your home quickly, an outright sale is probably your best bet. But if you’re not in a hurry, you might be able to get more money by refinancing your mortgage or entering into an equity sharing agreement (more on that below).
Equity Sharing Agreement
An equity sharing agreement is when you sell a portion of your home’s equity to an investor in exchange for a lump sum of cash. This can be a good option if you need cash but don’t want to give up ownership of your home.
One thing to keep in mind with an equity sharing agreement is that you’ll still be responsible for the mortgage on your home, even though you’ve sold a portion of the equity. And if the value of your home goes up, the investor will benefit, while you may end up having to pay more in interest over time.
So, these are the three main ways to sell your home: a cash-out refinance, an outright sale, or an equity sharing agreement. Each has its own pros and cons that you need to consider before making a decision.