[frgoff]

I told him to buy a bigger house back then as investment, but you know some people, in one ear and out the other.

This myth really annoys me. Sure, his $135,000 home is worth $400,000 now, but so are all the other $135,000 homes in the area

In other words, unless he moves to a completely different market, the only gain he gets from his "investment" is any equity he has paid down in the home. He'll still be carrying the same level of mortgage on the new house, assuming he rolls all of his payout into the down payment.

[s_asher]

You could live in the house for 2 years, sell it and put the tax-free gains in the bank. Then rent an apartment and wait for the housing market to drop before you buy again.

[LetsRok]

This myth really annoys me. Sure, his $135,000 home is worth $400,000 now, but so are all the other $135,000 homes in the area In other words, unless he moves to a completely different market, the only gain he gets from his "investment" is any equity he has paid down in the home. He'll still be carrying the same level of mortgage on the new house, assuming he rolls all of his payout into the down payment.

The key is to put all of your capital gain into the new house and keep your mortgage the same. I am doing the same thing. You always want to sell when the value of your existing house is not appreciating as rapidly as other types of houses in the market. I sold my home and bought another new home because it will appreciate faster because of the location and desirable features.