Buying your dream home when you have a house to sell
So, you are have seen your dream home you have been so patiently waiting for just put a for sale sign up on their front yard and you want to buy It.....but, you already have a house that you currently own. This is something that happens all the time in our jobs as realtors is helping clients work a strategy that is perfect for them to be able to get into that new house. In this article I am going to point out the pros and cons first of buying before selling and selling before buying. Each situation is unique to each person depending on their current situation with the house they own and their financial situation. So if you are looking to buy your dream house, but got to figure out what to do with the one you currently own here is some insight that will help you make the right decision.
***I want to note that their Is no cookie cutter perfect way to sell your house and buy your new dream home. Every situation is unique to each persons position they are in that is why you need an agent to help guide you with expertise to help you make the decisions that are best for your position.
1. Pros of Selling Before Buying.
- You won't have to risk paying for two mortgages at the same time
- Cash will be easily accessible for a down payment on your new property
- You will have a better ideas of the equity that can be put into your new home
- You won't have the pressure to reduce your asking price to sell your home quickly
- You will be able to let go of one home before taking on the responsibility of a new home, which can make things feel properly ordered.
- For those with less-than-stellar credit, you might not qualify to take on two mortgages
2. Cons of Selling Before Buying.
- Finding a temporary place to live before settling in a new home can be chaotic
- You will probably have to deal with moving two separate times which can be exhausting
- You may feel pressure to find a new home in a hurry
- Paying for storage and additional moving costs for two moves can add up
- Your investment will be temporarily out of the real estate market
3. Pros of Buying Before Selling
- The process of house hunting can be more relaxed and enjoyable
- You only move one time, so you won't face expensive storage fees or doubled moving expenses
- You are less likely to have regrets from rushing into buying a house in a hurry
- You will have a place to go right away before you even let go of your current house
- You have a cushion in case something goes wrong during the process of buying your new home. That way, if the deal falls through, you still have your old home to stay in.
4. Cons of Buying Before Selling
- If your cash is tied up in the investment in your current home, you may not have as much freedom to make a larger down payment or make a higher offer for the new home
- You might be pressured to accept a lower offer on your house if you are then in a rush to sell your house'
- You may end up paying for two residences at once until you sell your home
- You will also be responsible for two sets of taxes
- If you decide to rent out your current home until It sells, you may face many challenges that come with being a landlord. they may be more complex given the fact that you are trying to show and sell the home with a tenant in It.
- You may not qualify for a new mortgage when you have your existing one
5. Things you can do if you are buying or selling first
- Know the current market before you really start to make a decision, this is because you need to build your strategy around what the market is like, if It is favoring buyers or sellers
- Selling first makes It way easier to getting a new mortgage
- (Selling first) Can use something like a rent back agreement, where you can negotiate a term of length for how long you can stay in the property after closing making the mortgage payments to the new owner while you look for your next property.
- (Buying first) Contract contingency new home purchase is dependent upon them selling their home (not good if you are in a competitive market with a lot of buyers)
- Bridge loan - allows you to own two homes at the same time. Great if you planned to sell your home first then use proceeds to buy the seconds. Functions as a short term loan, intended to be repaid upon the sale of your original house.