Do you remember what it was like buying your first home? If it’s been several years, you’ll be pleasantly surprised at how much easier it is. The days of signing piles of paper and waiting weeks for a decision are over thanks to digital mortgage.
But that’s not the only thing that will be different this time around. For this purchase, you’re also juggling the sale of your first home while you shop for your next. So how exactly does that work?
Although the extra “balls in the air” make it a little more tricky, rest assured that your dedicated mortgage professional will do most of the work for you.
How To Buy a Home While Selling Your First Home
Ideally, you’d want to use the equity from your first home as a down payment for your new home. Passing it from one place to another in that manner would make your move easy-peasy.
Unfortunately, it rarely happens as seamlessly, and that’s partly due to the market conditions. So if you are in the market to buy your forever home, research your local real estate market first. Look at both the area where you are selling and the areas you are considering your next purchase.
When considering the selling side, look at how long comparable properties have been sitting on the market. This information is useful for determining how to price your home to make it both competitive while still making a generous profit. It would be a shame to list your home only to drop it several times before you get traffic or an offer.
Dropping your asking price too many times can psychologically make a home appear less valuable to potential buyers, also. You can research comparative homes on your own. However, a real estate agent would be able to find the best comps while suggesting a price based on your move timeline.
Considering the purchase of your new home, you’ll also want to research the market. Decide which areas you want to purchase, that way, when your current home is under contract, you’ll know precisely where to bid. Of course, you’ll also already want to have talked to a mortgage professional just in case you need a loan for your new home purchase.
About Contingency Offers
A “sale and settlement contingency” offer is when you use the proceeds from your current home to fund the purchase of your new home. Of course, this means that your offer is dependant on the sale of selling your existing home.
While ideal for you as the buyer, it’s not a very attractive deal for the seller of the home you hope to purchase. If another offer comes in from a buyer with a pre-approval letter, they will likely win the bidding war.
Sellers can even entertain other offers after they’ve accepted a contingent offer! For a “non-contingent” offer, you may want to consider a bridge loan.
A bridge loan is a rent-back arrangement. Essentially, you agree to “rent” your current home. That way you can sell your home and still live in it for 2-3 months while you shop for your next home. This option is not always available, but it’s worth looking into.
There are many moving pieces to buying a home. Luckily, you have a team available to take care of all the details. We work with you and your realtor to make your next purchase a fast and hassle-free. Contact us today to learn more.