- Plan Ahead
- Get a Bridge Loan
- Use a Contingency
- Consider Selling Before You Buy
1. Plan Ahead
Buying and selling both houses together is possible, but it will take much coordination and may include extending contracts or renting out your old home from the new owners for a short period of time. It will be stressful, but it can be done.
2. Get a Bridge Loan
One thing that may prove to be beneficial to buy and sell simultaneously is a bridge loan. Bridge loans will make it possible to use your current home’s equity to pay your down payment on the new one. Essentially, it is a short-term loan that must be paid relatively quickly, but it carries substantial payments with heftier late fees and penalties if you default on the loan.
3. Use a Contingency
Buying and selling simultaneously takes a lot of coordination and patience as you try and set up closings for the same day or within a few days. Usually, to accomplish this, the seller of your new home takes a risk by accepting your offer, contingent on the sale of your own home.
4. Consider Selling Before You Buy
If you're finding it difficult to buy and sell a home at the same time, it might be easier to sell your home first and then buy a new one. Of course, you'll have to deal with moving twice, but you won't have as many financial challenges. And in some cases, after selling your property, there is the option to rent your home back after closing. Essentially, you would sell the house, attend the closing, and then work out an agreement to rent from the new owner until you are able to close on the new property.
In most cases, this option is the least stressful. With this route, you are taking much less of a risk because you will know the exact amount of money that you will net from selling your property after the new buyer closes on your home. This means that you will have cash readily available for a downpayment on the new home. However, this option is only feasible if you plan to stay somewhere in between the two sales. Additionally, you’ll need to figure out storage for your furniture and belongings.
Placing all of your items into storage for a short time and renting month to month is a route that some individuals take. This provides time to find a new property and go through the buying and closing process without worrying about taking on two mortgages.
How to Sell Your Property First
If you determine that selling your current home makes the most sense for you, you will need to find a real estate agent to assist you in the process of listing your property for sale. Upon getting a solid and backed offer on your home, you can then initiate the process with your realtor to find your new home. Picking the location is your first step to finding your new house.
While looking for your new home, you will need to find a temporary living situation between the sale of your home and the closing for your new home. Sometimes, finding the right home for you can take some time, so it is paramount to keep your options open and to have some plans in place along with a backup option.
If you can afford two homes at the same time or take on two mortgages, buying a new home before selling your current home is an option. For this option, many lenders will need proof of a substantial amount of cash in the bank to be able to afford this financial burden along with the downpayment and closing costs of the new property. This can significantly deplete all of the cash that you have saved until you sell your current home. The element of uncertainty is a risk here, as you will not know the amount of money that you will make off of your old house before buying the new one. This is a bit of a gamble.
Buying before selling provides for the opportunity to only have one move at a time, making things more fluid and less stressful. Not to mention, the extra time gives you a bit of a buffer in the event that you have some hiccups along the way. If the home and deal falls through for some reason, you will still have your house to live in until you find another.
How to Buy Your New Property First
In the event that you opt to buy the new property first and are financially able to, you will need to be on the hunt for a new property as soon as possible. Do not rush this process, but when you decide upon a home and make your offer, you can request an extended closing. This will give you the opportunity to attempt to coordinate the sale of your home with the purchase of your new home. Your next step after initiating the purchase of a new home Is to begin the process of selling your current house.
Depending on your financial situation, you may be able to purchase the new house with savings and eliminate the headache of carrying two mortgages.
Taking the time to become educated on all options when it comes to buying and selling at the same time is essential to ensuring the smoothest transition tailored to you.