You Bought a $400,000 House 5 Years Ago. Did You Actually Make Money? Let’s Run the Numbers

A $400,000 home that gained value over five years may look like a huge financial win, but mortgage debt, selling costs and other expenses can dramatically change the homeowner’s actual profit – Shutterstock

Buying a $400,000 house five years ago may look like a pretty good financial move today. Depending on where that house sits, its market value could have climbed substantially, but the number on a real estate website does not tell the whole story.

A house can gain value without putting that entire gain into the homeowner’s pocket. Mortgage balances, selling costs, improvements, taxes, insurance, maintenance, and even the original down payment all affect the final score, so it is time to take this imaginary $400,000 house off the listing page and run the numbers as an actual owner would.