The post How to Buy Another House Before Selling Yours by Camille Cabrera appeared first on Benzinga. Visit Benzinga to get more great content like this.
Searching for information about how to buy another house before selling yours in the United States can feel complicated. A streamlined collection of steps can inform your homebuying decisions while boosting your confidence. Before purchasing another home, decide if you are able to comfortably take on the financial responsibility. The right financing and housing market information can get you into the new home of your dreams before selling your first.
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Can You Buy Another House Before You Sell Yours?
Technically, you can buy another house before you sell yours. It’s possible you will have two mortgages at the same time. Buying another house prior to selling yours can offer you peace of mind by ensuring that you have a place to live throughout the homebuying process.
6 Steps to Buy Another House Before Selling
When buying another house before selling, it’s important to know your specific financial goals as well as larger housing market trends. Consider your financing options and speak with a capable lender to learn about available loans. The process of purchasing a new home before selling can feel scary, but having the right information can help put your mind at ease.
1. Understand Your Goals and Financial Situation
The most important step when exploring the housing market is to understand where you stand. Review your financial situation and evaluate if you should buy another house before selling yours. After examining your finances, think about how your current situation will work alongside your future goals.
2. Assess the Housing Market
To effectively assess the market, review larger market trends as well as smaller trends within the neighborhood where you intend to live. Research the neighborhood where you want to buy. Review homes that recently sold in the area to have a point of comparison. Location is an important factor when contemplating a neighborhood.
3. Work with a Real Estate Agent
Find a Real Estate Agent who understands your housing needs. Real Estate Agents bring a wealth of knowledge to the table thanks to the experience accumulated with every deal. Agents assist with a wide selection of tasks ranging from closing costs to navigating negotiations.
4. Consider Your Options for Financing
Financing will likely become an important topic of conversation as you buy another home before selling yours. In some situations, it’s possible to refinance. According to the U.S. Department of Housing and Urban Development, you can refinance your Federal Housing Administration (FHA) mortgage. Reach out to lenders to learn about loans and programs that can decrease the down payment and closing costs.
Lenders provide useful resources such as mortgage calculators and blog posts to educate potential borrowers. Have questions related to interest rates and terms to clarify the details before procuring a mortgage loan.
Second Mortgage
A second mortgage takes place when you are still paying off your first mortgage. The mortgages are secured by the properties.
Bridge loan
Bridge loans are used when you’re in the process of buying one home and selling another. A bridge loan closes the gap in the short term while you secure long-term funding.
HELOC or Home Equity Loan
A home equity loan uses the equity in your home as collateral. The amount of the loan depends on your property value. A home equity line of credit (HELOC) is viewed as a secured loan that functions on a revolving or as-needed basis. HELOCs are secured by your home’s equity.
Cash Buyer
When possible, purchasing a home using cash can allow you to avoid making mortgage payments. Certain banks and mortgage lenders offer cash programs designed to help you fund a cash offer. Making a cash offer can help you to stand out from the crowd and improve your chances of getting the home of your dreams.
5. Start Looking for and Buying Your New Home
Once you’ve successfully achieved the previous steps, you can start looking for another home. Keep in mind key factors such as your financial situation and future goals as you navigate the market. The process of buying a new home includes steps such as getting a home inspection, implementing a final walkthrough and overseeing the completion of paperwork. Take your time reviewing your options to avoid buyer’s remorse.
6. Sell Your Current Home
When becoming a homeseller, work with a reputable Real Estate Agent. You can use the funds from the sale of your old home to pay off or reduce the mortgage on your new home. Speak with a lending professional to understand if it’s possible to make early payments.
Tips When Buying a New House Before Selling
When buying a new house before selling, contemplate multiple plans of action. Bridging the financial gap between the two houses can be easier than you think. Research options such as making contingent offers or asking for a delayed closing. Take control of your financial future by making the situation work for you.
Consider Making Contingent Offers
Contingent offers mean that you specify conditions related to the sale of a property. A home sale contingency can include safeguards for homebuyers. For example, sales contingencies can help you avoid paying for multiple mortgages at the same time.
Ask for a Delayed Closing
Asking for a delayed closing could improve your timing when it comes to buying another house before selling your current one. Know your closing date prior to speaking with a professional to see if you can extend the closing. When navigating the buying process, think about providing earnest money to show your commitment to the deal.
Use a Buy-Before-You-Sell Program
Examine buy-before-you-sell programs to decide if one of the options is right for you. A buy-before-you-sell program helps close the gap between buying a new house and selling your old home. The short-term loan programs use the equity in your old home to finance the purchase of a new one.
Rent Out Your Home
Renting out your home could bring in an additional source of revenue and offset expenses. Examine rental prices within your neighborhood to determine a competitive rate. Renting your home will likely be subject to local and state regulations.
Advantages of Buying a House Before Selling
Purchasing a new house before selling your current home offers several benefits. For example, the strategy provides a housing safety net while saving you money on moving or rental fees. Investing in real estate remains one of the best ways to diversify your assets.
- Housing safety net: Buying a house before selling ensures that you will have a place to stay in the future. Having two homes at once allows you to avoid scrambling to find housing at the last minute in the event your previous property sells faster than expected.
- Lower moving fees: Buying before selling allows you to avoid paying additional moving expenses related to moving to temporary housing. In addition to lowering expenses, moving once also saves time.
- Improved timeline: Purchasing a home before selling your previous house allows you to take your time with renovations and other time-sensitive tasks. You can make improvements to your new home while residing in your previous house.
Factors to Consider
Before buying another house, examine factors that might impact your decision. For example, review potential financial expenses. Avoid feeling pressured to sell too early to have the best chance at negotiating a top deal.
- Potential financial strain: Know if you will be able to carry the added financial responsibility before buying another home. In certain situations, you could obtain a second mortgage or qualify for a buy-before-you-sell program.
- Possible mortgage expenses: Keep in mind that you will likely need to pay for two mortgages at the same time if you do not sell your house prior to buying a new one. Calculate your anticipated mortgage payments prior to buying a new home. Lenders have mortgage calculators located on their websites.
- Probable selling pressure: The pressure to sell could hinder your chances of obtaining the best deal possible. Make an effort to stay grounded as you attempt to sell your house.
Buy Now and Sell Later
Life rarely goes according to plan. Having the right housing information can help steer you in the right direction. A team of professionals at your fingertips ensures you find the right home while navigating life’s unexpected twists and turns. The proper steps can act as a roadmap as you buckle up and enjoy the ride to homeownership.
Frequently Asked Questions
Can you use the equity in your current home to finance a new one?
Yes, it’s possible to use the equity in your current home to finance a new one.
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How do you know if you qualify for two mortgages?
Review factors such as your credit score to have a general idea about your ability to qualify for two mortgages. Speak with a lender to understand your exact position.
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What happens if you can’t sell your current home?
If you can’t sell your current home, and you’ve already purchased another house then it’s possible that you will be paying two mortgages. Each housing situation differs, and you will want to make sure you can afford two mortgages if your home doesn’t sell quickly.
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The post How to Buy Another House Before Selling Yours by Camille Cabrera appeared first on Benzinga. Visit Benzinga to get more great content like this.