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Should I Sell My Current Home Before I Buy A New One?
You may be wondering if there is a right order to buying and selling a home. For example, would it be better to sell first and then shop for a new home?
Or maybe it’s best to buy first then sell your current home?
This article will help you to understand the advantages of each scenario as well as a creative alternative.
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What To Consider When You Buy First:
One of the main perks of buying first is that you can take your time to shop around. You can visit as many open houses as it takes without any pressure to rush your decision.
You can also take your time to plan the move, as well as make any repairs or upgrades. If you buy first, it will be much easier to coordinate changing your address, turning on utilities, and making changes to childcare and school.
On the other hand, there may be some overlap in mortgage payments if you don’t sell your current home within a month of buying your new home. If this sounds like too much of a burden then buying before selling may not be for you.
You’ll also want to consider that your income and debts affect how much you qualify for. You will find it difficult to get approved for a new mortgage, particularly if your income cannot support two mortgages.
What To Consider When You Sell First:
Selling your home first means that you’ll have your equity free and on hand, ready to make an offer on the next house. In a competitive market, having cash on hand is a significant advantage.
You’ll also save money by not having to pay two mortgages and utilities at the same time. It can even seem pretty wasteful to pay double when in reality you are living only one home.
While avoiding paying double would be ideal, you should know that there may be some overlap. For example, you will likely have temporary housing in an apartment while you shop for your new home. In this case, you’ll probably pay a month or so of rent plus your mortgage.
But this is still a better scenario than paying for two mortgages for an indefinite amount of time. Remember that when you buy first, you are at the mercy of other homebuyers. If instead, you’re renting, the worst that can happen is that you pay a fine for breaking the lease early.
Plus there’s also the feeling of being rushed to find a home. When you sell first and are renting an apartment, there’s a sense of urgency to buy quickly and stop “throwing money away” towards rent.
The Homebuying-and-Selling Alternative
We’ve given you the pros and cons of both selling-first and buying-first scenarios.
Now we want to share an alternative to both: make a “contingent offer,” which is dependent on selling your current home.
The main benefit is that it bridges your current home to your future home so that you avoid double mortgage payments and the need to rent an apartment.
You may be wondering what to use as a down payment if it’s tied up in the equity of your current home. A possible solution is to take a home equity line of credit (HELOC) –a home loan product that you can apply for right now using our online application –and use it to cover the down payment while still paying the mortgage on your current home.
Whether you buy or sell first, it requires quite a bit of coordination, especially when it comes to qualifying for a new home loan. Find out the expert advice you need and learn more about your options by contacting us today!