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Don't feel pressured to rush into purchasing your next home, especially if you're having doubts about the location and the type of home you want. Renting isn't 'throwing money away,' especially in the short-term. Buying a home you soon have to sell because it doesn't meet your needs or wants is throwing money away - the transaction costs of buying and selling real estate can dwarf the short-term costs of renting.
If you're unsure about where you want to buy, try renting in the area you love most. If the neighborhood turns out to be everything you dreamed (or at least good enough), then you're in position to move fast when homes in that area become available. On the other hand, if you find that the neighborhood has too many warts, you can pat yourself on the back for not rushing into a purchase and use the rental as a base for investigating other options.
If you do rent after selling your house - because you no longer have those tax-deductible mortgage interest and property tax payments - be sure to increase your income tax withholding or estimated quarterly payments. Your employer's benefit department can provide you with Form W-4 for adjusting your withholding. If you're self-employed, adjust your quarterly tax payments using the 'Estimated Tax Worksheet' that comes with Form 1040-ES.
- Keep Copies of the Closing and Settlement Papers
- Keep Proof of Improvements and Prior Purchases
- Stash Your Cash in a Good Money Market Fund
- Double-check the Tax Rules for Excluding Tax on Profits
- Cast a Broad Net When You Consider Your Next Home
- Reevaluate Your Personal Finances When Things Change
- Don't Simply Rehire Your Listing Agent When You Repurchase
