All You Need to Know
The real estate market is full of uncertainties. Luckily, you’ll have real estate agents to help you. They know more about market conditions and have updated knowledge about the housing market. A typical person may not be as knowledgeable as them about selling or buying a house. Therefore, proper guidance from a real estate agent can do wonders for you!
Suppose you are in a position where you don’t know what to do – you may forward any questions to them.
So, if you’re thinking about, “how to buy another house before selling yours”, they are the ones who will assess your situation and, in turn, help you know whether to sell or buy first. This is a crucial step, as agents can evaluate your position better; they know all about the prices and current market conditions.
You cannot look for one definitive answer about buying and selling a property; there are many reasons a person buys or sells a house. However, it is always different for every person. Therefore, assessing your situation becomes necessary in making an educated decision.
If you are ready to buy a new home before selling your current one, here are a few things to keep in mind:
To begin, you must obtain pre-approval for a new mortgage. In doing so, you understand your situation to afford your next house.
Next, you must devise a down payment for the new home. Once you have your financing, you can start shopping for your new home; just be sure to account for the selling costs.
Now, let us look at the pros and cons of buying before you sell your house:
Pros of buying a new house before selling
First, you’ll have a place to live while your old house is on the market. This can be especially helpful if you have a family.
Plus, you won’t have to move twice!
Second, you can take your time to find the perfect new home without being under pressure to sell your old one quickly.
This is great because one doesn’t need to hurry to stage and market the house.
This way, the homeowner will have enough time to find the best home for themselves, first.
If you can afford to buy a new home without selling your existing one first, you’ll make yourself more attractive to potential home buyers.
You can take your time finding the perfect property instead of rushing because you have a buyer.
As a result, you will find yourself in a less stressful situation.
When one buys first, everything shifts to a new home, and in turn, selling becomes much more accessible. Buyers mostly like vacant houses, so an empty house looks cleaner and more organized.
Furthermore, buying a new home before selling your old one can take advantage of current market conditions. You may get a higher price for your old home, and a lower mortgage rate on your new home. Furthermore, it enables you to save money over the life of your loan.
Cons of buying a new house before selling
You have to find a method to finance the new property without selling your current one. It would be advantageous if you commit to repaying your loan until you are ready to sell your home.
Buying first will require you to prepare for two mortgages.
Buying a home may be exciting, but it does involve some steps and procedures. Therefore, it is both exciting and tiring.
Meanwhile, when you search for your dream home, you’ll have to struggle thr0ugh the process to find the right offer.
Just like when you sell your home, you have your reasons; the same is true with buying a home; maybe your family has expanded, you want to move to a new area, or you like a different neighborhood more than your current one.
However, the situation is different for each individual. Sometimes, people don’t have enough money to purchase without selling their homes first. For them, selling their old home and buying a new one is necessary, but, it is better if one can afford to buy it first.
For many homeowners, the financial burden of paying two mortgages makes traditional buying and selling out of the question. With the price of a home increasing in nearly every major city worldwide, this presents a challenging situation for many of today’s homebuyers. As a result, you should only take this step if you are confident that you can afford two mortgages and that your house will sell quickly.
If the demand for new houses and condos is high, buying first is often the best way to invest, even if it goes against what traditional financial advisers would recommend.
For someone with no regular income, buying a house first is not advisable; as buying a new home without selling the prior one might be risky. Even if you consult a real estate agent, they would also advise you to sell your home first. So, purchase a house only when you are in a sound financial position. Otherwise, it is not worth the effort and time.
Generally, people sell their homes and purchase new homes to eliminate all the hustles and uncertainties. If you buy first, you may not sell your house after, which could cause much trouble if you’re in need of money.
Moreover, you are not sure how long it will take if you decide to sell later. Those who do sell, and then think of buying a new house, remove some stress from their lives.
Ways to Buy Before Selling
1. Make a contingent offer.
When you make a contingency offer, tell the seller you will buy the house when your own house sells. However, there is no certainty that your house will sell within that period. This is why most sellers don’t like contingency offers.
2. Use a bridge loan.
Yes, you can avail for bridge loans to buy your new house before selling the current one. Taking a bridge loan means putting your existing home as collateral to secure a short-term loan.
You can use the loan to make payments on your current home and pay your down payment on a new home. The time to repay such loans ranges from 6 months to 3 years.
However, there are some disadvantages to this. First of all, it has a high-interest rate. Secondly, it also has its terms and fees. It can be costly, as you may end up paying three payments; an old mortgage, a new mortgage, and the bridge loan payment.
3. Use a home equity loan.
A home equity loan is a great way to finance the purchase of a new one. You can obtain a low-interest loan by utilizing the equity in your current home, which you can use for the down payment and closing costs on your new home. This type of loan is also tax-deductible, saving you money on your taxes.
So, if you take a home equity loan, think about a few things; it is essential to know every term and condition of the loan.
Likewise, you must assess whether you can pay the monthly payments and see the uncertainty attached to using your home as collateral.
4. Make a cash offer.
If you are financially sound, you can make a cash offer. This is the easiest way to buy a house. The sellers usually take you more seriously when you buy with a cash offer. Likewise, they know that there is no risk of the deal falling through due to financing issues. Additionally, closing on a cash deal is often quicker than going through the traditional mortgage process.
So, many people think it is the best time to buy a house when you have already sold your old one. However, this may not always be true; sometimes, buying a new home before selling yours is even better.
If you are wanting to sell your house, you must know which options are better. This is how one can take time to find the perfect home without worrying about finding the right buyer for the current home. On top of that, it is less stressful, as you won’t have to face any added pressure.
Consider buying before selling if you prefer a calmer and more relaxed experience. This is how you get rid of every anxieties related to finding a new place to live immediately. Plus, you get more time to research and contact the right buyer or seller.
At Selling.House, our team of experts can assist you through the ins and outs of selling and buying a home. Contact us today for a free quote, and receive your cash offer without any pressure to sell!