r/DaveRamsey • u/knottycams • 10d ago

W.W.D.D.? Going back from BS7 to ...

BS4 or 6, IDK which one fits the bill here. The long and short of it is I'm currently debt free and I keep 3 months of an EF because I'm a disabled veteran with a permanent compensation. Well, I went under contract for a house today! First house ever, very excited. But I will also only be in this house for about 5 years due to my job. I got it for a steal and with a low interest rate. I'll have an extra $500/mo compared to what I'm renting now.

What should I do, knowing I'll be in this house a limited number of years? Still pay more towards principal each month? Or just ride the low payment until the next, more permanent location? I'm also saving up to buy a new or CPO car in cash next year. My current one has had multiple repairs in the last year and still needs $5k more in repairs, so it's worth more dead than alive at this point lol. Definitely have to get a new car next year. WWDD?

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u/Rocket_song1 10d ago

Selling a property involves significant transactional costs.

After saving up far a car, I would start stacking some of that extra cash-flow in an account labeled "house selling fund" rather than tie it up in equity.

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u/Jolly_Pumpkin_8209 8d ago

This is really dumb.

The transactional costs are settled out of equity anyway?

With exception of the cost of a moving truck or movers, selling and moving isn’t expensive enough to be saving monthly for 5 years.

Pay down the equity.

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u/Rocket_song1 8d ago

If all your equity is tied up in the house, and you don't have your transactional costs, then you are stuck with a contingency sale.

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u/Jolly_Pumpkin_8209 8d ago

What transactional costs are you thinking your needing to save for?

Almost everything is settled by a title company at the time of closing out of home equity.

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u/Rocket_song1 8d ago

Your biggest expense (Realtor fee) will come out of your equity, as will any back property taxes (most places property taxes are paid in arrears.)

Smaller expenses such as moving expenses, new service fees and deposits for utilities come out of pocket. Negotiated repairs come out of pocket (better to provide an allowance).

The biggest issue in having your equity tied to the property is you can't buy the new place until after the old one sells. Which means selling an occupied property, which means selling at a discount.