Buying & Selling at the Same Time?
Are you planning to buy a new house but you haven't sold your current home yet? Are you concerned of how you're going to close on your current home and close on the new home all at the same time? Or, a bit worried about perhaps owning two homes while your current home sells?
Before you start this journey and you put your current house on the market, please take a few minutes and watch this video. You're going to be glad you did! At the end, I have a bonus for you.
Today, I'm going to talk about how you could buy a new home before or while your current home is being sold. We're going to take a look at the three most common scenarios, and the pros and cons of each, and how it might apply to your personal situation. More importantly, by the end of this video, you'll know what path is right for you in order to achieve that smooth and stress-free transition to your new home.
Let's get started right now.... Most homeowners looking to buy a new home have to sell their current home in order to afford the new home. In fact, 68% of homeowners looking to buy a new home are in this situation. You may need the equity out of your current home in order to put the down payment on the new home, or you may have to sell your home in order to qualify for the new home, in order to pay the old one off first, or both.
You're probably thinking, no problem. We'll just make an offer on the new house contingent on the old house selling, and you'd be right. If we were in a buyer's market, and if you are lucky enough not to be in a multi-offer situation on the home you're trying to buy. We are still very much in a seller's market and our inventory still remains low.
This is actually great news for you. More about that in a sec. How are you going to pull this off? The ideal scenario would be for you to receive a rock solid cash offer on your current home and your new buyers give you ample time to close on your new home. You can then do simultaneous closings, meaning that you can close on the current home and close on the new home within a few minutes of each other on the same day. I've done a lot of these through the years, but it's not the norm.
Being a repeat buyer, you do have options when your buy and sell timelines don't work perfectly in place. One option would be is to get a low down payment loan. By owning two homes temporarily for a very short time, can really increase your flexibility, especially if you don't owe anything on your current home. By doing this, you can eliminate having to make a contingent offer on the new house, so if you're comfortable with and can qualify for possibly two mortgage payments, temporarily, this can really provide a lot of flexibility for you.
There is no rule that says you cannot apply for a new mortgage by still owning your current home. You don't have to say that you're going to rent it out or even say that you're going to do so. You just simply add the new mortgage payment or the new house payment to the list of other monthly expenses when applying for your new mortgage.
If you qualify for both loans, again temporarily, you can then keep your current home and just sell it after you close on the new house. A temporary double payment is not the only consideration here. You've got to decide how you're going to make the down payment on the new home. Again, many repeat buyers rely on the equity they built in their current homes to put towards the down payment of their new home. If you plan on keeping your home, obviously you're not going to have those sales proceeds in order to put that down payment on the new house.
You're going to need to have some cash in savings or other asset accounts. There's another way. You can go with an 80/10/10. That's an 80% mortgage, a 10% second mortgage, and a 10% down payment. Some lenders even allow you to do a 15% second mortgage and a 5% down payment. This can work beautifully for those of you who still own your current home. It works like this.
When you sell, you're going to pay off that second mortgage and you're left with a single smaller mortgage, as if you've made a larger down payment in the first place. If that sounds a little confusing for you, or you're not really sure what I'm talking about, I've put a link below, and it talks in detail about the piggyback loans. It can work beautifully, but you still may feel that you need the sales proceeds of the current home or you may not qualify for the temporary dual mortgages.
If so, and you want to remain in your current home until you purchase or close on the new home, you're going to have to make an offer on a new home contingent on your current home selling, but stay with me. I'm going to share with you one last scenario that I feel like in today's market is the best option.
You could sell your current home first, then start looking for a new property. Of course, this solution is going to require you having temporary living situations set up and putting your stuff in storage and maybe moving twice, but the extra logistics can pay off big. Remember what I said earlier? We're in a seller's market right now. That means you are in the driver's seat. Take advantage of these increased sales prices. Also, you can afford to be choosy when accepting a particular offer. Time is on your side.
Plus, if you're financing, you're buying your new home with historically low interest rates. Because we are in a seller's market, our inventory is still low. It may take you weeks to find your ideal home. It is so much better to make a relaxed, well-informed decision, opposed to having to settle for whatever's available out there at the time. With your current home sold, you are now free to not compromise on those must haves, home amenities or your ideal location.
Before embarking on this journey of selling your current home and buying another, please sit down with your real estate professional and talk through all of your options. Together, make a plan that makes sense to your individual circumstances that will result in a smooth and stress free transition.
I'm Lisa Kelly, Lakeland Homes and Lifestyles with Premier Realty in beautiful Lakeland, Florida. I hope you found this information helpful, now that you know that you have several options when you're trying to sell and buy at the same time. If you did, hit like, and also feel free to ask me all your questions in the comments below.
Oh, and the bonus I promised you. Below, you're going to find a link to my 21 page seller's guide. In it, you're going to find loads of information to get you on the path to a quick and profitable selling experience.
Enjoy! And until then, I'll see you on the next one.