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When you sell your home before buying a new one, you’re no longer on the hook for paying two mortgages at once. This means you don’t have to feel rushed into making a housing decision. If you have somewhere to stay after closing, then you can also take your time and make sure your next home purchase is the right one.
When buying a new home first, you won’t have to accommodate these appointments, as you will already be moved into your new home. This is a win when it comes to you and your family’s schedules not being impacted. If you want to make repairs and improvements to your home, it’s much easier to do that while not living there. You may not know exactly what the mortgage would be on the second house, but you can look at homes within your budget on sites like Zillow, which has a mortgage calculator.
Why do sellers prefer cash offers?
If you’re getting close to selling your home, you might consider asking the sellers of your new home for a delayed closing. Putting off the closing slightly may help better align the sale of your old home with the purchase of the new one. In exchange, you could offer to put up more earnest money or pay some additional closing costs, just to show your good faith. Even if you do qualify for two mortgages, that doesn’t mean you’ll be comfortable doing so. If the very idea of stressing your finances like this makes you break out in a cold sweat, consider adding a home sale contingency to your home purchase contract.
When you list a home with a professional real estate agent, you’ll always have someone to answer your questions and help you figure out your situation. First, they can help with staging your home and deciding what changes to make. They can find the right photographer and staging expert so your home looks its best. And if you’re thinking about a bigger home, it might be time to think about more furniture. Just be careful not to go overboard with credit card purchases to finance all this.
Avoid purchasing with a contingent offer
Unless you’ve been approved to hold two mortgages, you’ll need to include a sales contingency. In an ideal situation, the sale of your old home would align perfectly with the purchase of your new home. But real estate transactions are often a little messier, and the timing won’t necessarily line up perfectly. You might end up selling your existing home — and having to vacate it — before you find a new one, leaving you to undergo the expense and hassle of temporary housing.
Different lenders will present different financing options – some of which will prove more favorable to you than others in the end. Capital gains tax refers to fees that are levied by the Internal Revenue Service on assets that you make a profit on when you sell them. If you’re a U.S. citizen, you will be required to pay capital gains taxes on these profits. Research from Zillow shows some buyers can save tens of thousands of dollars over the course of their loan if they shop for the best rate. Just one percentage point in higher interest could add more than $200 to a monthly payment on a typical U.S. home, and nearly $75,000 over a 30-year mortgage. Buyers can compare multiple lenders on Zillow’s online mortgage marketplace.
How to get a bridging loan
Luckily, there are a few solutions out there that can help you buy before you sell. For this reason, sellers often shy away from offers with sales contingencies. If you must include a sales contingency, you might have a harder time getting your offer accepted. If your old house doesn’t sell as quickly expected, it could potentially put the deal at risk.
In both cases, you can’t have bought or sold a primary residence in the last two years. Even if you have good reason to buy before you sell, that doesn’t mean it’ll be easy. For one, would you even qualify in lenders’ eyes to carry two mortgages at once? The content on this site is not intended to provide legal, financial or real estate advice.
There’s an easier way, and our FREE guide breaks down how it can work for you. Services like these allow you to "sell" your home before you truly sell, and you don't have to break into your savings or investments, or take on a second mortgage. Get started with a free estimate of how much your home is worth.
If you are an employee for a company that provides you with a 401K, you may be able to take out a loan from your account to put towards the down payment on your new home. An HR representative can provide you with eligibility information along with the interest rate and repayment period. You can get your old house deep cleaned and move into the new one, leaving it constantly staged so people can come over whenever they want to view it.
If you decide to buy before selling your existing property, there is no rush. Since you’re not tied to a timeline, you can do a thorough search for your dream home on your own terms. Homeowners who choose to buy a house before they sell should be prepared for two months of overlapping mortgage payments at a bare minimum. New solutions from power buyers — real estate tech companies who focus their services on homebuyers — can help you buy before you sell or do both simultaneously with ease.
Selling first is beneficial if you need to access your current home equity to buy your new home. However, selling first often requires temporary housing while buying your new house. A bridge loan is a short-term loan you can put toward your down payment.
But homes staged prior to listing sold in just 23 days — 8 times faster. Buying first allows you to focus on just one transaction at a time. Instead of rushing through the buying process to find somewhere to live before your sale closes, you can take your time to find the perfect house. When you meet with one of our loan originators, who have an average of 25 years of experience, you see that experience makes the difference. Bridging loans can give you the funding you need to buy a new home for a short time, allowing you to pay them off when you sell your old home.
To refinance your mortgage means rewriting your current mortgage by taking out a new loan for the current value of your home with new terms, rates, and conditions. You can make the terms longer or shorter, you can lower the interest rate, you can even switch from an adjustable-rate mortgage to a fixed-rate loan. We dig into the pros and cons of selling before buying here, so give it a quick read to weigh your options. Buying first also means you can stay in your current home while you house hunt, without the need to include a rent-back agreement or sale contingency in your sale or offer.
Knowing what kind of market you’re in is important whether you’re just moving across town, or if you’re moving across the country. If you’re selling in one market and buying in another, you’ll need to factor that into your timing. The length of time it takes to buy and sell can vary dramatically depending on the local real estate scene. From a real estate market standpoint, buying a second home before selling makes sense if you’re in a sellers market. In this situation, homes tend to sell more quickly, which means you won’t be carrying two mortgages for an extended period of time. To do this, you’ll need your gross income, monthly debts or other obligations like condo fees, and credit score.
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