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Shopping for a new home? Already own a home that you want to sell? You might be wondering where to start. It feels like you have to time things perfectly, or you’ll either find yourself in a situation where you’re carrying two mortgages, or you’ll have nowhere to live.
The truth is, it’s difficult to time it perfectly, so chances are you will end up either paying two mortgages, at least temporarily, or living in a temporary situation, like a rental. Each of these scenarios carries with it some inconveniences, but before you either list your home or start searching for a new one, you will probably have to decide which works better for you.
Selling your existing home first, and living in a rental, or maybe even staying with friends or relatives for a while, means you can use any money you make in the sale of the existing home toward the purchase of the new one. It also means you won’t have to feel rushed to find a new home, and you will be less likely to settle. On the downside, you have to find a short term rental – or friends or family who will take you in – and you will end up moving twice, in a fairly short period ot time. You will probably have to put a lot of your belongings in storage for a little while too.
Buying a new home before you sell your existing home means a more seamless transition; you can just move right from your old home to your new one and unpack once. Downsides to this option are that you won’t have profits from the existing home to use toward the down payment of the new one, so you’ll have to have more saved up initially. Also, you will have to be approved for a new mortgage while you still owe on your current one, which can pose a challenge.
There are other options too, like rent backs, which is where you sell your home and then “rent” it from the new buyers until you find a new home, but both parties must be on board. There are also bridge loans, short term loans that help pay for the costs of buying a home that will be paid once you sell your old home.
The best thing you can do to get started when you are ready to buy and sell at the same time is to talk to an expert. Your mortgage lender can lay out all your options for you and also give you an idea of what the market looks like, so you can make the best decision for your own unique situation.
To learn about different types of mortgage loans or to talk to a mortgage lending expert, visit lonestarfinancing.com.
Sources:
“3 Ways to Buy and Sell a Home at the Same Time,” Zillow Group
“Buying and Selling at the Same Time,” Zillow Group
