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The Formula for Figuring Out If You Sell Your Home Now

NEW YORK ( TheStreet) -- Most home sellers have some leeway on timing, often a lot of it. If you're moving just because you want to, you can choose to do it now, or next year, or two or three years from now -- whatever suits your fancy. Even if you're moving for a job you don't have to sell right away. You could rent out the old place until prices rise, or leave the family there and rent a studio in your new location until the spouse and kids are ready to join you.

But any given option can look less appealing, or more so, if market conditions change. So, under today's conditions, which makes the most financial sense: selling now or selling later?

That depends on two factors: your best guess about future mortgage rates, and whether you are trading up or trading down.

Clearly, if you think mortgage rates will skyrocket, a quicker move would be wiser, because a loan of a given size could carry a much larger payment after rates go up. But the Federal Reserve has indicated it doesn't intend to start pushing for higher rates until 2015. So if you're optimistic, mortgage rates need not affect your sales timing for a year or two, maybe longer.

But homes' price changes are another matter. If prices were to fall, you'd clearly want to sell now, rent for a while and buy the new home later. But that's not the situation today. Instead, prices are rising, and most experts expect that to continue. That means your current home would likely command a higher price in a year or so -- perhaps a reason to hold off on that sale.

But remember: The price of the home you're going to buy will be rising as well. So let's look at some simple arithmetic, assuming mortgage rates are not a factor because you own your current home and will pay cash for the next.

Say you can get $300,000 for your current home and want to buy one costing $400,000. Sell now and you've got to come up with $100,000 to make up the difference.

If prices rise 15% over the next two years, you'll get $345,000 for the old home and pay $460,000 for the new one. Now you've got to come up with $115,000 for the difference. Though you would get more for your home by waiting, you'd have been better off selling earlier.

Now look at it the other way. You could sell for $300,000 today and downsize to a Florida condo for $200,000, putting $100,000 into your pocket. If prices rise 15%, you could sell the current home for $345,000 and buy the condo for $230,000, putting $115,000 in your pocket. In this downsizing, the delay would pay off, assuming that mortgage rates were not a factor.

For most sellers, of course, the mortgage rate on the new home is a factor, making the calculation much more complicated. Also, delay would allow ordinary monthly mortgage payments to reduce the debt on your current home, offsetting some of the extra cost if you shouldered a higher mortgage rate on the new property.

There are a lot of "ifs" here. The best approach is to plug your current mortgage data into the Mortgage Loan Calculator, then click "View Report" to see what your loan balance would be in a year or two. You can use that to figure how much cash you could take out of the home given different assumptions about your sales price now and in the future.

Then plug new numbers into the calculator to figure your payments on a new mortgage in the future given various assumptions about the loan size and mortgage rate.

By playing with the numbers, you can see whether your situation conforms to the rule of thumb: With interest rates and home prices rising, it's better to trade up now; but for a downsizing, you might do better by waiting, especially if you'll pay cash for the new place.

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