Whether you need to sell your home and buy a new one due to a work transfer or you have to move to a better district, shifting is always difficult.
When you’re attempting to sell your current house simultaneously, that stress increases. It looks like the game of “mortgage chicken.” When you are selling and buying a home at the same time, you will need to investigate a top seller’s market as both the buyer and seller. While a seller’s market will benefit you, it may also provide difficulties for buyers.
However, using a proper strategy will help you track the ups and downs a bit easier. Here are some pro tips to minimize the cost of purchasing and selling a home at the same time.
What Should You Do First? Buy Or Sell?
Some individuals advice selling your old home before selling a house with a mortgage if you want to do so to avoid having two mortgages due at the same time. Some people advise waiting to sell so you won’t be between residences.
Buying Before Selling
There are various advantages of purchasing your new home first before selling. This will help you move quickly. Further, you can take your time and shift your things to the new house on any schedule you like. Apart from this, buying first can help assure you have a home to live in by your rigid deadline if you know you must move to a new city for a new job by a specific date.
However, on the financial side, you need to have your existing mortgage payment and pay for the new one plus closing costs, down payment, moving expenses, and maintenance on both properties. It can be difficult to handle if your budget is limited.
The Good
- An easier move
- No living with friends, family, or in limbo
- More control over your timeline
- The relaxed home buying process
The Bad
- Two mortgage payments
- More financial stress
- High debt-to-income ratio
- Hard to qualify for a mortgage
- Challenging to deal with a down payment
Tips if you’re buying first
- Rent your old property
- Examine a contingency clause
- Consider a bridge loan or a home equity loan
Selling before buying a new house
Some people sell their old house first. This will help them to have the sale proceeds in hand when looking for a new home. In this way, there is no need to manage two mortgage payments or deal with closing costs while maintaining both houses.
Selling before purchasing a new one is simple and easy to budget for. However, the major downside is that it leaves you homeless. After selling home, you will be left in limbo, or in a friend’s living room. Furthermore, after selling an old house the stress could push you toward buying a new home in a rush.
The Good
- Financial stress is less
- Provides more security
- Frees up cash for your new house purchase
- Avoid two mortgage payments
- It is easier to qualify for a new loan
The Bad
- Leaves you living in limbo
- Needs two moves
- It will double your moving costs
- May take stress to purchase your new home
Tips if you’re selling first
- Arrange temporary house before selling
- Keep in mind what you are looking in a new home
- Be ready to buy new one and preapproved for your loan
- Negotiate a lease back
Which is the right option for you?
The optimal choice for you is influenced by a variety of variables. You should consider your schedule, your finances, the housing market in your area, and other factors.
Ask yourself these questions to get the right route for your home sale:
- What can I afford?
- How quickly do I need to move?
- How competitive is the real estate market?
In the end, there is no right or wrong decision when it comes to selling your home and purchasing a new one. Consider the big picture and be aware of the advantages, disadvantages, and costs associated with each choice.