Expert: Jeff Kessler - 2/8/2012

Question
Hello-
I just had a question about the costs of upgrading to a new house when you outgrow your current one.  We have been in our house just about a year, but feel it may be too small soon (more kids coming) and we may need to get a bigger one is a few years.  We bought it for $200,000 and put $40,000 down.  I am just wondering about estimated cost if we were to get a new house after such a short time.  Say we found another house for about the same price or slightly higher.  Would the estimated realtor fees of, say $10,000 (5% of the purchase price) and the estimated $4000 closing costs on the new house have to be paid out of pocket, or would they be part of the new loan that we get?  Does having more equity in the house make  the costs of getting a new home lower?  We don’t have a lot of money so just trying to figure out how expensive it will be.  Thanks for your help!

Answer
Hi Lisa
Are you planning on selling your home you're in now? If so and you stay in your current home for two years you can keep all your capital gains tax free.
You can then use that money to buy a new home.
If you plan to sell then with Realtor fees and other costs it could be close to 8%.  I am not sure what state you are in so I am just trying to be on the high side.
Then when you purchase you may be able to ask the seller to pay up to 6% of your closing cost.  This will be dependent on what your lender will let you guys do. You could also try to roll the closing costs in unless you do an FHA loan and you will only need to bring 3.5% down and the rest will be rolled in.
Email me back if you need more clarification or have more questions,
Thanks
Jeff

Http:\\www.realtyATX.com.