There?s a lot of information out there for first-time homebuyers, but when you have to balance selling your current home and buying a new one in the same time period, the process can be more complicated. With a little help you can be better prepared, and buying and selling a home at the same time can become a simpler process.
Although the transition may never be seamless, there are several things you can do to make the sale of your existing home go more smoothly as you close on a new one. Check out these tips for tracking the market, obtaining mortgage loans, finding temporary housing and more, when you are simultaneously buying and selling houses.
Contact a real estate agent and start tracking the market
Start scoping out the market conditions before you put your home up for sale. Calculate how much you have left on your mortgage, and what you want to have paid off before the sale of your home. Be sure to consider any home equity loans you have. Then, find a real estate agent to help you assess how much your home is worth, how other similarly valued homes are selling and how long it will take to sell in the current market. Of course, sometimes you need to relocate quickly for work or family, or things don?t go as planned. That?s when it?s important to understand your backup options.
Take stock of your personal and financial situation
There are a few questions you need to ask yourself when buying and selling a house at the same time:
* What are the market conditions? Is it more favorable for buyers or sellers?
* How much is your home worth?
* Do you have the equity or cash on hand to buy first, and then sell quickly?
* Is your credit good enough to carry two loans for a short period of time?
* How will you manage mortgage payments while saving for a new down payment?
* Are you on a tight timeline?
* Are you moving to a different region and will need multiple real estate agents?
* What will you do if your house sells before you?re ready to buy?
* What are your priorities and what do they cost in the area you?re looking at?
* Are you looking for a home of equal, lesser or greater value than the one you are in?
Once you outline your major concerns, check out these next steps based on market conditions.
Buying and selling a home in a buyer?s market
In a buyer?s market, it may be tough to sell your home for the asking price you might otherwise anticipate. It may mean more work repairing and staging your home to make it more appealing to buyers. But it could also mean you are able to make a lower-priced offer on your dream home and have a better chance of it being accepted.
If it looks like the market is trending in a buyer?s favor, put your home on the market early. This will let you be more selective with offers as you prepare to move. It may also mean you?ll be closing the sale by the time you?re ready to buy. There?s no guarantee you?ll be able to sync up buying and selling a house, but the closer you can get these events, the better. Cash from the sale will let you pay down your mortgage and buy a new place, or you may be able to use the time your home is on the market to pay down more of your loan so your credit is good enough to carry two loans at once. If you can?t sell by the time you?re ready to buy, find out if the seller of the house you want to purchase is willing to let you put in a contingency offer, where you will buy as soon as your house sells.
Buying and selling a home in a seller?s market
Start looking before you think you?re ready. In a seller?s market, you may be more likely to get the appraised value of your home. So, you can prepare by looking for homes you?ll be able to afford once you sell. You should also take this time to find out what size mortgage loan you?ll need by obtaining a mortgage pre-approval letter. Be aware, your existing mortgage loan will be a factor when calculating your debt, but you may find this means you?ll be qualified for better rates and amounts once that?s paid off from the sale.
If you do sell before you?re ready to buy, or negotiations to close on your new home are taking longer than expected, it?s important to have a backup plan. You may be able to sell the home and put your belongings in storage while you rent for a while, or move into the new house before the sale is final. You may also be able to negotiate a rent-back where you pay the new owners of your home rent for a month or so until you?ve closed on your new home.
Be ready for anything
Buying and selling a house at the same time is stressful. Whether you?re making a contingency deal or negotiating a rent-back, be sure to get everything in writing. Also, even with the best laid plans, closing dates can shift, so have a back-up plan like storage space or a rental in case things don?t go as smoothly as you?d like. In addition to meeting with a real estate agent, talk to a home loan advisor to find out what you need to do to manage your existing mortgage and prepare to take on a new one. They can help you obtain a mortgage pre-approval so you have a stronger sense of your financial position when making offers as you?re buying and selling homes at the same time.
Sponsored content was created and provided by Citizens Financial Group.