It is a huge endeavor when you plan to buy a home. The deadlines, the paperwork, the documents and the research work can be a bit too stressful. If you couple this with selling a home simultaneously, it turns into an overwhelming headache for you. Nevertheless, there are few things that you can keep in mind if you’re considering selling your home and buying your home at the same time.
Buy your new home first – A look at your options
Trying to buy a home and then sell one can be intimidating enough. When you sell of residence first, you could end up with no place to reside unless you end up with the perfect home. On the contrary, if you buy first, you might get stuck with 2 mortgages at the same time. So, here are few options to buy a new home first.
- Before listing your current home, crack an offer on a home with sale & settlement
Find the dream home and soon make an offer of ‘sale and settlement contingency’ which means that your current offer is possible after your current home is sold off. However, this isn’t advisable in a very competitive market.
- Utilize your personal savings, a bridge loan or may be a HELOC
Let alone paying your mortgage early, there are most who can’t afford to pay for 2 loans at a time. If you don’t have enough savings to buy a home with cash, use either a HELOC or a bridge loan to cover purchasing costs. Keep paying off the loan on your present home.
- Rent your present home to get costs of paying your loan
If you have potential renters who agree to pay the amount which you own on your monthly mortgage installments, it makes enough sense to rent it out. You can keep paying your mortgage without difficulty.
Selling your home first – Your options
- Include a settlement contingency on the new home
Once your old home is put on market, watch out for your dream home but don’t make any deal unless you receive an offer on your present home. Even when you find your new home, ask for a ‘settlement contingency’ where your offer will be possible after the selling of your current home.
- Ask for a rent-back agreement with the buyers
When the new owners of your house allow you to stay in the home for an agreed time period in lieu of rent payments, this is called a rent-back agreement. If you can successfully negotiate this while selling your home, you can fall back on this place while you keep searching for the new home. However, be sure that this offer might have an adverse impact on the number of potential offers on your home.
No matter which option you choose for, make sure you handle it with poise and wisdom. Don’t forget to consider you mortgage affordability when you choose a new home loan for the next home that you’re going to buy.