Moving out of your parents’ house and into a newly purchased home is one thing. But having a home to sell while looking for a new one takes things to a whole new level. The stress of buying and selling at the same time can drive you to drink if you’re not prepared, or if you don’t have the right team behind you to guide your through the process.
Follow these tips to help you avoid owning two homes at the same time – or wind up without a home at all.
Start Working With a Mortgage Broker Now
You’ve got to understand the numbers when to comes to both the sale of your existing home and the purchase of your new home. Your first stop should be with a mortgage broker who will help you navigate your money situation and your financing options.
You’ll be able to figure out things such as how much of a down payment you can scrounge up for a new home, and how much equity you currently have in your existing home. Once you’ve got these numbers crunched, get your mortgage pre-approval process started so you’re ready to pounce when you find the house that’s right for you.
Understand the Current Market
Is currently it a buyer’s or seller’s market where you are? The answer to this question will help determine the state of supply versus demand in your area. If it’s a buyer’s market, there should be plenty of inventory to sift through, which means you could probably find the perfect house in no time. However this might mean that it could take a little longer to sell your home since buyers have the upper hand. In this case, you might want to put your home up for sale first before you start pounding the pavement in search of your new home.
On the other hand, a seller’s market could mean the opposite – while you might be able to sell your home quickly and for top dollar, it might be slim pickings as far as finding a new house goes. This could put you in a position were you might have to vacate your home before buying another home. In this scenario, you might want to start looking for a new house first before you list your home, at least to give you a feel for what’s out there.
Negotiate a Longer Closing Period
If you list your home and it sells before you’ve been able to secure a new home, negotiate with your buyer to see if they are willing to agree to a longer closing period. For instance, instead of a 30- or 45-day closing, try negotiating for 90 days or more so you have more time to find the home you want.
Rent Back After Selling
If your buyer isn’t keen on a super-long closing period, ask them if they’d be willing to rent back the home after you’ve sold it until you’ve had a chance to find your new home. Not only is this extremely helpful for you, but it also gives your buyers a chance to make a few bucks in the process from collecting rent checks. It should be noted, however that this option typically only works in a seller’s market.
Look Into Bridging Your Mortgage
Don’t freak out if you’ve already found and bought the home of your dreams, but still haven’t had a solid offer on your current home yet. You don’t exactly have to carry the weight of two mortgages at the same time. That’s where a bridge loan can be a huge life-saver. These are temporary loans that “bridge” the gap between the mortgages of both your existing and your new home. This loan is secured against your current property, and the money from the bridge loan can then be put towards a down payment on your “movin’—on-up” home.
There could be some drawbacks to a bridge loan, depending on your financial situation and the state of the current market. It’s always a good idea to chat with a mortgage broker and real estate agent first before tapping into this option.
As always, make sure you work with an experienced real estate agent. With two sales involved here, things could get overly complex for the average home owner with no assistance. There are tons of variables that can come into play when you’re buying and selling at the same time, which will each affect the decision-making process.
Your realtor can give you sound advice based on the market and your financial position so you’re not stuck in a situation that will wind up costing you dearly.