My husband and I can’t decide between selling our house or renting it. We live in Northern California, in an area we don’t like. The house is cute, we have a 2.5% interest rate, and we have $262,000 left on our mortgage. The Redfin estimate for our house is currently $550,000.

We took in a child last year and it’s not an area we want him to grow up in as the schools aren’t good and it’s not the safest area. A good friend in another state said we could move in with her rent-free for a year until we worked things out.

My husband and I are ready to move, but we are unsure if we should rent our house until we find another area we would like to settle in, or sell and buy a new house this year since prices are increasing in all the countries.

I was laid off last year and I’m thinking of going back to school, which makes things complicated. Our current monthly mortgage payment is $1,700 and we could rent the house for up to $3,000 per month. We think too much about it and can’t make a decision.

Undecided

‘The big move‘ is a CNET column that examines the ins and outs of real estate, from finding a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@CNET.com.

Dear Undecided,

Focus on your long-term financial goals and ask yourself if your home will help you achieve them. I have a few questions for you: Do you want to leverage your home now and graduate debt-free? Or do you want to keep the home as an asset that you can leverage as a lifeline?

You have a mortgage rate of 2.5%, which only requires a monthly mortgage payment of $1,700, and you can make a net profit of $1,300. Current mortgage rates are more than double that amount. On this basis, do not sell. Renting your home seems to be the most optimal route.

Continuing your education, especially after being laid off, requires money. You also don’t like the school district or your current neighborhood, and safety is a concern. For these reasons, I understand why you think it makes sense to profit from the house.

At the same time, you’ll also be living rent-free – just make sure the deal is solid so you don’t have any drama with your friend later. You’re essentially saving tens of thousands of dollars in rent, and you’ll also enjoy a steady stream of rental income.

Uncertainty versus instability

You have a year to figure things out. I know uncertainty can feel like instability and you may feel anxious about the situation during the year, but you live rent free for a year which gives you plenty of time to decide if you really need to sell.

Plus, a lot of things change in a year. What if you decide you don’t like living in another state and prefer the stability of your own home in Northern California? If you keep the house, you will still have a safety net.

And don’t worry too much about real estate prices rising or falling. The market does not appear to be heading for a crash, if economic indicators are to be believed. Supply is low and demand is high. Mortgage rates are high, but the market is short on inventory.

You’ll likely get a good price for your NoCal home when you sell it. The longer you hold on to it, the more likely your home will increase in value. Please don’t sell because you feel the need to. Only sell if you think the calculations make sense.

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2024-02-24 10:56:14
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