Can I Buy A Home Before Selling the Existing One?December 4th, 2022 by Administrator
To eliminate the possibility of getting stuck paying two mortgages, buying a home before selling the old home wasn’t recommended traditionally. Even the real estate agents were not comfortable dealing with such clients. But, today, this doesn’t make any sense. Instead, buying before selling proves beneficial to many homeowners.
Following are the pros to buy a home before selling the existing one:
- It’s a seller’s market and you should move accordingly. Here, the demand for homes is greater than the supply of homes available for sale. As the demand is high, you should move quickly to get the home you want. Just keep in mind that selling your old home until purchasing your new home is less risky because of the seller’s market.
- Selling a home when you are living in it is challenging, especially if you have pets and children. You will have to stage it, clean it as well as leave it whenever buyers come. After moving to your new home, these problems will disappear.
- Buying a home before selling your old home will avoid moving twice. After selling, you will have to move out of your home on the buyer’s timeline. This might increase your expenses and lead to lots of inconveniences as you will have to find temporary housing.
Consider these benefits and buy your dream home before selling your old home undoubtedly. If you are concerned about finances, there are different options available for you. With these options, buying before selling will become easier for you. But, make sure you discuss these options with your real estate broker.
How should you buy a home before selling the current one?
Make a contingent offer
With a home sale contingency offer, you buy a new home on the condition to sell your old home successfully within a period. If you don’t sell the home, the offer on your new home becomes void. Later, you can recoup your earnest money deposit.
For you, this offer is great but not for sellers. The contingent offer introduces uncertainty into the transaction and sellers want certainty. You should strongly convince your seller for this offer.
Use a bridge loan
With a bridge loan, you use your existing home as collateral to secure a short-term loan. You use this loan amount for a down payment on a new home or to make payments on the existing home. The bridge loan is designed for repayment within six months to three years.
The only thing is that the bridge loan is expensive because of its short-term nature as well as additional fees and terms.
Use a home equity loan
With a home equity loan, you give a way to access the equity in your current home before selling it. This is like a second mortgage on your existing home and very similar to a bridge loan. The difference is that the home equity loan has a much longer term. You will secure a lower interest rate on a home equity loan.
By now, you might have understood that buying a new home before selling your old home is not a bad idea. You just have to present the right offer to your seller. And this is only possible if you work with the right real estate broker.