Selling a home can be a stressful time. There’s so much to deal with all at once, from people to finances to paperwork.
But there’s a light at the end of that tunnel, and it is….money!
It’s easy to forget that selling a house is done for one thing only: to get the proceeds in one lump sum, all together. Congratulations, you did it!
The hard part is over now, and you’ll get to enjoy all the fruits of your labor now that the transaction is behind you.
But that could also be where another hard part starts. Wanting money is one thing. Having it is something else. That’s because you have to be wise. What do you do with your windfall? What is the wisest way to use it?
So, after you’ve asked yourself the question “What is my home worth?” sit on down and think about the following ideas for using that money.
Pay Your New Mortgage
Perhaps the most obvious thing to do with your proceeds from your home sale is to pay part or all of your new mortgage if you’re buying another home after selling your current one.
This depends entirely on your situation. If you’ve been in your house only for a few years, then you probably still have a lot of your mortgage left to go on it. In that case, your sale proceeds will go toward paying that off before you get anything for your next house.
Of course, if you’re retiring into a condo from your long-paid-off house, then your money is all yours to do with as you like!
Investing your house money is another easy idea. When we’re talking about a house, we probably mean something in the six-figure range. That’s a decent chunk of money that you can easily squirrel away for your future.
There are several philosophies out there about whether it’s wise to invest lump sums all at once or invest them piece by piece to allow for market volatility. Talk to a professional about that. But just be grateful that you have this windfall to do with as you like.
Save for the College Fund
Lastly, you know college is never going to be cheap, and if you want to give your kids a good start in life, you can take some of that money you got for your home and put it in a 529 plan for your kids, or just a regular brokerage account.
Follow the same strategies you would for any other investing, and this should pay off for you in the end. Those semesters and books add up quickly, and even though that might be years away for your kids, you’ll be happy to have had that time on your side when you invested.
With all the compounding, you might be surprised at how much you won’t have to shell out later!
So, happy selling and happy planning!