Does length of time at an address affect loan your loan rates

[Nick R.]

I'm planning on selling my townhouse and have lived there for 1 1/2 years. After I sell the townhouse, I'll be living with a friend of mine for anywhere from 3 months to a year until I buy my primary again. Will living at a few addresses in a relatively short time affect my loan rate and/or terms?

Thanks!

[David Beard]

Hi Nick, no that will not affect your terms.

Another question: do you have a capital gain on the townhouse? If so, then you can avoid tax if you lived there for 2 years prior to selling, so at least think about this in the context of your plans. If you sell after 1.5 years, you'll have a long term capital gain, taxed at 15% if you're in the 25% or higher income tax bracket. If you're only in the 15% tax bracket, then there will be no tax on the gain and thus taxes will not be a consideration.

For a single person, the 25% tax bracket starts with taxable income of $36,250 (include the gain from the townhome in that number). Taxable income is after your personal exemption and itemized deductions have been applied, so it equates to gross income of at least $46,250, and likely more if you itemize your deductions (which you probably would if you have a mortgage on the townhome).