First-time home seller, here. I’m planning on selling my house in the next couple months. We’re going to use the profits from the sales to pay off debt and make a down payment on our next house. Do the profits from house #1 go directly into my bank account at the conclusion of the sale so that I can choose how to use them myself, or do they go into some kind of escrow account where the bank holds the money? I just want to know so that I can plan accordingly for debt payments and moving expenses, and such. Thanks in advance.
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The profits you make aren’t really “profits.” They are, but its not like selling shares of a stock where its just pure profit. What happens is that if you sell your house for a greater value than you bought it for, then that “profit” becomes the new down payment for the new house. So if you bought your first house for $200k and sold it for $300k, the bank will subtract the $200k you owed them from the new $300k sales price of the house and you will be given $100k in cash which you can put towards a down payment. The remaining $200k would be new mortgage that you will owe. Sometimes you are given a check for the $100k, sometimes it is put directly into the account of the title company that is handling the sale of selling your house, they subtract the amount you owed the bank and then give you the rest of the money. The key is yes you are given the money but its not really money you can keep but go towards your new down payment.
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