How to buy a home when you already own a home:
Have you been dreaming of your next home, but you’re not sure what to do with your current home? You’ve heard that it’s a sellers market, but what does that mean if you also need to buy?
There are three options to consider when you want to move but you already have a home. The easiest requires the most money and income, while the least risky option comes with a bit more complexity. Regardless of which option is right for you, we help people buy and sell all the time, and can help you as well!
Option 1: Buy and Sell Later (or keep as a rental):
This requires that you qualify for the new loan and comfortably pay both mortgages if you hold and rent the first house, or until you sell the first house. This makes it easier to be a buyer and given that the average home sells in 44 days [and many in the first week] you won’t have two homes for very long. Or you can pay cash for your next home.
Option 2: Buy and Sell at the same time:
This is called a contingent purchase, where you get an offer accepted on the next house that is subject to selling your first house. They close the same day or within a couple days and you pay off the existing loan and buy your next house with a new loan and cash from the sale. This can make it harder to get your offer accepted and until you get an offer on the home you’re selling you might get “bumped” by a non-contingent buyer on the house you want to purchase. One key to this process is to have your existing home ready to be put on the market within a day or so of getting your offer accepted.
Option 3: Sell then Buy:
This is the least complex option, but you might have to move twice unless you can rent back the house you sold while you buy your new house. You’ll know exactly how much money you have to work with, and you can take your time looking. Plus, you only have one mortgage at a time. Many of our clients have enjoyed renting a condo or other unique property while they are between homes.
Other ways to make a move easier:
- Borrow from family as a bridge loan
- Borrow from retirement
- Get the seller to carry the first or second loan on the new house
- Get early occupancy and move in before you sell and then close simultaneously
- Refinance or use a HELOC to buy the new house and then pay off when you sell