This is a classic real estate question that nearly everyone has to deal with when the time comes. If you sell first, you may find yourself under a tight deadline to find another house, or be forced into temporary quarters. If you buy first, you may be strapped with two mortgage payments for at least a couple of months. These are serious concerns that need to be taken into consideration before you make a decision. In the end, it comes down to each individual’s circumstances and whether you want the risk of owning two houses or possibly none at all.
On Realtor.com, some realtors believe the stress level is lower when you sell first unless you have the money to make two mortgage payments. Selling first gives you time to get pre-approved for your next mortgage, and time to explore all the housing options in your price range. Another upside to selling first is you’ll have the cash in your pocket needed to put a down payment on your home. The result: you look like a cash buyer when you make an offer on the home of your dreams. Read more here.
But don’t get caught up thinking selling first is ideal for your situation. Selling first can be a pain in the neck if things don’t go as smoothly as planned. You run the risk of being forced out of your house before you find something. Moving twice is a huge hassle. There is also the chance you aren’t able to find a house you like. You have to think about how long you are willing to live in temporary quarters until you find something suitable.
Follow these tips to help you choose:
Do your homework
You’ve already been through the home buying process once, so you have a good idea of what is required. Get pre-approved for a mortgage, line up a hardworking and responsive real estate agent to help you find the new house and, if geographically appropriate, to list your current home. Having help will take some of the burden off of your shoulders.
The best thing you can do is help get your house ready to sell by cleaning out the closets, painting the front door, picking up the yard, and fixing the furnace, if needed. Talk with a real estate agent, get an approximate listing price and discuss timing the listing. You’ll want to deliberate how long it might take to sell your home when listed at a few different price points so that you have a time frame to work with and can get a plan in order.
Make a Decision
After all your research, you need to decide if your financial and emotional situation is better able to handle owning two houses for a brief period, or moving into short term housing should your old house sell before you are able to locate and secure a new one. No one knows you better than yourself. What option would make the most sense?
According to Mortgage News Daily, “If you opt for the possibility of owning two homes, get your financial situation in order. Look into a bridge loan (which will give you the funds for the new down payment and maybe even enough to subsidize a second mortgage for a while) or arrange for a home equity loan.” Read more about bridge loans here.
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