What is the Break Even Point?

The break even point is a term used in all business transactions, including home purchases and sales. It is the point where the business owner, you in this case, will have revenue equal to costs. It can be hard to think of your mortgage and home as a business, but all real estate is an investment with a potential income. 

Breaking Even on a Home's Sale

To determine your break even point, use this simple formula. Add the down payment you provided, any improvements you have paid for, the monthly payments you have made and the remaining sum on your mortgage loan. This is the total you will need to earn on a sale in order to break even. Anything less, and you will owe your mortgage lender money after the sale has completed.

Making Money on a Home's Sale

Most homeowners would like to make money on the sale of a home instead of just breaking even. This is possible in two key ways: remaining in a home long enough to see an increase in market value or making value-added improvements. Even if you spend money upgrading your home, many improvements will generate a greater return than expenditure. Make improvements to safety features first and then kitchens and baths in order to raise your home's value the fastest.

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