So, you have decided to buy your new home before you sell your current place. Here are a few killer tips for you.
Purchase with Savings
If you’re in the financial position to do so, the simplest route is to use your savings for the down payment and then sell your old home after the dust settles. Keep in mind that you’ll need enough money to cover closing costs, inspections, and moving expenses.
To buy a new home before you sell your current place, you need to make sure that you can qualify for your new mortgage while holding your existing one. Make sure to talk to your lender to confirm that this approach is possible for you.
Add a Contingency
You can submit an offer with a sale and settlement contingency, which means you’ll buy the home only if you can successfully sell your existing home. Typically, the sellers of the home you’re buying are still allowed to seek other offers, but you’ll receive the first right of refusal if you’re unable to remove the contingency when a second offer comes in. These types of contingencies typically work best in buyers’ markets, when the seller is less likely to get another offer.
The biggest benefit to buying first – assuming your lender confirms that you can – is that you can purchase a new home WITHOUT it being contingent upon the sale of your existing home, so adding this contingency would usually not be the way to go. In a hot sellers’ market, few sellers will be willing to accept a contingency. Today, in Northern Virginia, it’s almost impossible.
Request an Extended Closing
If you’re confident that your existing home will sell in a short time, you can request to extend the closing date of your new home past the standard 30 to 45 days. This will give you enough time to sell your current home and use your home equity to buy another house. Just like with contingent offers, you’re more likely to have success with this strategy in a buyers’ market.
Rent out your Home
If you don’t need the money from your first home to make your down payment on the new home, you could always find renters for your current home. This will allow you to cover the mortgage costs while delaying the need to sell when you’re buying.
If you decide to rent out your current home, being a landlord isn’t always a walk in the park. When you decide to sell, it can be a challenge to sell while tenants are living in the home.
Believe it or not, the majority of homeowners actually manage to buy and sell a house in quick succession. You, too, can do it.
Let me know if I can help!