From One Home to Another: Should You Sell or Buy First?
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This is a common and often frustrating problem. Don’t worry; we’re here to help!
First, it’s important to recognize that while buying a home can be a large undertaking, the same goes for selling a home. Trying to do both at the same time requires a lot of planning and really good timing.
Unless everything works out perfectly, which is highly unlikely, there will be a time in the process where you either don’t own any houses, or you own two at once. But which is better?
Selling First
Many people believe that you should sell your current home before buying a new one, so you won’t be responsible for two mortgages at the same time.
Selling your home will give you access to the equity. You may need this to pay for storage and a place to stay, as well as the down payment on your new home.
While you won’t have to pay two mortgages, you will still be spending money. First, you need to find somewhere to stay until you buy a new home.
Some of the most common solutions to this problem include staying in a hotel or extended stay, staying with friends or family, or renting back your old house from the new owners until you can move into your new home.
You will also need somewhere to store your belongings. In that case, everything will have to be moved twice—once to a storage unit and once to the new house.
If you decide to sell first, resist the urge to rush into finding a new home. Where you will live next is an important decision and you shouldn’t settle, even if your temporary accommodations are uncomfortable.
Buying First
Buying a new home before you’ve sold your current house can be risky if you aren’t in a great financial situation.
A Realtors.com survey shows that on average, homes take 98 days to sell—over three months! That can be a long time to fund two mortgages.
In addition, it can be difficult to qualify for a second mortgage. If you do qualify, you won’t be able to use the money from the sale of your home toward your down payment.
Sometimes things don’t work out exactly as planned. What if you find the perfect new house before you sell your current home? You may be able to get a short-term loan, or ‘bridge loan,’ using the equity you have in your home.
Once you sell, you pay the loan back with the profit you make from the sale.
To learn more about short term loans or bridge loans, and the home buying process, contact a mortgage specialist at a First Bank branch near you.
