Buying your first home is a nerve-wracking experience for many because you are thrust into a situation where people throw around terms that they assume you know. Your mortgage professional may talk about closing costs, real estate transfer taxes, and escrow, while your buyer’s agent assumes he or she can use such words as Craftsman Bungalow and soffit.
Once you have been through the experience and have a few years of home ownership under your belt, you may feel like it’s time to upgrade to a larger home. Even though you may feel more confident with real estate vocabulary the second time, you go through the process, buying and selling homes within a short time frame can be challenging.
Thinking about selling and then buying real estate in quick succession may give you heartburn, but it is essential to remember that millions of Americans do this each year. It is also important to remember that you are not alone. Real estate professionals are available to walk you through the process. Here are the basics of buying and then selling a home (or selling and then buying).
Buying a New Home First
Is your dream home for sale, and you know it’s going to move fast? Here are some options to consider.
Make a Contingent Offer
You may consider making an offer on your dream home with a “sale and settlement contingency”. This means that the sale will not be finalized until your current home is sold. This is the safest financial option, but the seller may not accept the offer if there is a lot of competition for the property.
Take out a Loan
If you are concerned that your income and savings cannot cover two mortgage payments, you may consider taking out an additional loan until your current home sells. Talk with your mortgage company representative to see whether a HELOC or bridge loan would be the best option for you.
Rent Your Current Home
Instead of selling your current home, you may consider becoming a landlord and renting out the place. Check with your existing homeowner’s association agreement to see if rentals are allowed in your area.
Selling Your Current Home First
If you are living in a rather cold market right now, you may want to consider selling your current home before you put an offer on a new property. Here are some things to consider.
Ask for Similar Closing Dates
If all the stars are aligned correctly, you could manage to have the same closing dates on both houses. To make this smooth transition a reality, you may consider crossing your fingers, knocking on wood, and rubbing your lucky rabbit’s foot.
Find a Short-Term Rental
Although not ideal, you may have to find a place to rent that offers a month-to-month lease. Either that or you could place your household items in storage and live with very accommodating friends or family in the interim.
No matter if you buy or sell first, you may want to check out this home sale proceeds calculator. This calculator will show you the difference between working with a traditional realtor to sell your home as opposed to a discount realtor, who will sell your home for a 1.5% commission.