In a typical home buying process, there are nerves, panic and pure frustration. But just think of the headaches created when you have to sell your house and buy a new one at the same time. If your timing is off, you could wind up paying two house payments each month until your house gets sold. Follow these 3 steps to time your move correctly.
1. Sell First
One way to ensure that you won’t end up paying two mortgages at once is to sell first. Yes, that’s easier said than done. What if you need the proceeds from your house to qualify for a loan for a new house?
Here’s a strategy: include a contingency for the move-out date or move-in date. Your contingency can either be with the buyer of your old house or the seller of your new house. Beware that some buyers and sellers will pass on your offer if you put in contingencies. It could affect your negotiating power and could push your close back.
It doesn’t matter if you need the money from your home sale to buy a new home or not, you always want to sell your house first, not buy your new one first. There are more ways to find a temporary place to live than to find more money for a new house.
2. Get Your Stuff Out
When you are balancing a sell with a purchase, you could end up closing pretty quickly. If you are urgently trying to make a deal and you find a buyer that also wants a fast close, you may need to be out of your house a lot sooner than you thought.
Get your stuff out early so that you don’t even have to think about it. Just keep your essentials: staging furniture, clothes and dishes. Put as much as you can in storage while your home is on the market.
3. Prepare a Temporary Home
Worst case scenario – well besides paying two mortgages – is you sold your house but now you have nowhere to go. You do have a few options:
- Friends and Relatives: Check around with your friends and family to see if there is anyone with space to house you until you find your new home.
- Take Out a Bridge Loan: You may just have to take out a small, short-term loan to help finance your new home or to pay rent while you search. Try not to use an equity line of credit while you are still negotiating the sale of your old house.
- Pay Your Buyers for Extra Time: You could just pay your buyers rent for another month or two (if they can afford to stay in their old home for a couple more months) while you buy a new home. It never hurts to ask.
Use a Professional Real Estate Agent
Lastly, use an agent. Your agent knows the market where you live and where you are moving to and can help you time home sale/purchase correctly.
If you find yourself in a situation like the one above, you’re not alone. Give me a call today for more guidance.