House on mortgage?

Question

Is it true that if someone buys home on mortgage but has to dispose of it in less than 1 year, there is net financial loss? thanks

House to be bought in Toronto Canada.

Answer 1

Kind of a vague question, but it all depends on the costs incurred in the purchase, and the end sale price. Most people who sell a home in under 12 months will take a loss simply because there is no equity in the house, and the expenses incurred in purchasing it were rolled into your mortgage.

If you paid 150k for the house, and incurred 5k in expenses to either close on the deal, or do anything else to the home, unless you sell it for 155k then in fact you took a loss.

Even if the closing costs weren't rolled into the mortgage, you have to take all your expenses involved in purchasing the home and obtaining the mortgage into consideration.

Answer 2

Yes...you just paid closing costs,title searches,credit report fees,title transfers,etc...and when you sell,you pay the agent ...so unless your home appreciated 20% in a year,you lose thousands...