Should I Sell My House Before I Buy My Next House?
Moving from one home to another can be stressful. Unlike buying your first home where you only had to be concerned with one transaction, there are many more considerations when selling your home is involved. Should you sell your home first? Buy first? Or try to time it perfectly to do both at once?
Buying a New Home First
There are many advantages to buying your new home first. The biggest advantage is that it will make your move much easier. You can take your time, do any projects (such as painting or flooring) before moving in, and avoid the rush of having to move out by a certain date. If you need to be in your new home for a job or the new school year, buying first can ensure that you are settled in your new home on that timeline. However, buying first can be financially tricky. You will be balancing two mortgage payments, plus you will need to come up with a down payment, closing costs, and moving expenses without the benefit of your home sale. You may even struggle to get a mortgage for your new home if you plan on making two mortgage payments and your financial situation doesn’t show that it can be possible.
When you plan to buy first, there are ways to make it easier. A home equity loan or bridge loan may be possible to cover expenses. You can rent out your old home to cover the mortgage while looking for a permanent buyer. A contingency clause may be possible where your offer to buy a new home is pending the sale of your current home.
Selling Your Home First
Selling your home first has some definite advantages. You will know exactly how much you have to spend on your new home, you will have your down payment ready to go, and you will not have to risk paying two mortgages and maintaining two homes. However, selling your home first means that you will need to find a place to live in the interim between closing on your old home and buying your new home. You will have to essentially move twice. You’ll move out of your old home and into your temporary housing, then again when you find your new home. You will likely need to find storage for most of your belongings during this time. Living in limbo can be very stressful, especially if you have children or pets. You may even rush to purchase a home that isn’t right, simply to feel settled.
If you plan to sell your home first, there are things you can do to make it easier. Make sure you arrange temporary housing before you list your home, find a storage solution, and make sure you have your financing lined up for your new home purchase. If you are pre-approved for a mortgage and have a down payment ready, you can be a very attractive buyer.
Buying and Selling at the Same Time
Buying and selling at the same time can be complicated, but with the right support, is manageable. The biggest challenge is timing the two transactions to happen simultaneously, which may involve negotiating with both your buyer and your lender. Although you will only need to deal with one move, that move will also need to be timed right so that you are completely out of one house and into the new house immediately.
How Do You Know Which is Right for Your Situation?
To figure out which is the right move for your situation, you’ll need to have the support of a realtor and possibly a financial advisor to look at the full picture of your needs. Understanding your budget is the biggest factor. Can you handle two mortgages and the upkeep on two homes if you buy first? Do you have a place to live if you sell first? How is the market? Your realtor may suggest selling first in a hot market, then delaying a purchase until the market cools, or buying first in a buyer’s market and renting out your home until the market flips back.
There is no “one size fits all” answer to the question. The best thing to do is look at the big picture, weigh your options, consider all the advantages and drawbacks, and look to your trusted professionals for advice. We’re here to help, and we are experts in this real estate market. Contact Amberwood Real Estate to talk about your homeownership dreams so we can start on the path to making them a reality.