How To Buy And Sell A Home At The Same Time
It can be daunting to sell your current home and buy another
home at the same time. Who wants to pay two mortgages or move
twice? Use our tips below to help you get organized and plan
your move, so everything goes smoothly.
Teamwork Is Important
Use the professionals you have hired to ease you through the
process: your real estate agent, lawyer, lender, appraiser,
inspectors, movers, etc. To make sure everyone is on the same
page, keep communication open with all those involved. Use a
notebook to record the dates and details of phone and
face-to-face discussions and transactions. Also instruct your
real estate agent to let you know about problems as soon as they
occur so you can work them out together.
When Selling
Deciding when to put your home on the market can be the toughest
decision. Listing your house as far in advance as possible makes
it more likely that you will sell before you buy, meaning only
one mortgage to pay. Consider having a home inspection to
uncover any underlying issues that you can repair or adjust for
in your asking price before you list your home.
When deciding on offers, require the buyer to be pre-approved
within five to 10 days of accepting their offer. That way, if
the buyer can't proceed, you haven't wasted much time and, when
you make an offer on a new home, you will know that the
financing conditions on your existing home have been satisfied.
Also, don't overlook a slightly lower offer that allows you more
flexibility with respect to your closing date. For example, if
your top bidder has to sell their current house first, you might
prefer to deal with a first-time homebuyer or renter.
A long close or a rent-back option can give you more time to
find your new home. This allows you to stay in the house as a
renter without the headache of an interim move. When Buying
Buying seems like it would be the easier part of the
transaction, but remember you may need some of the equity in
your current home for the down payment on your new home. Assess
if you have enough for a down payment, decide what you can
afford, and get pre-approved for a mortgage so you can act fast
when you find a house.
Check what's available in your price range before putting your
home on the market. If there's little available, you may want to
buy first and ask for a long close. Have the property thoroughly
inspected and make sure it can be insured before you make your
offer.
Trading spaces is complicated, so it's important to have a
back-up plan. What if there's a hitch and you have to sell
before you find something you want to buy, or you find the
perfect house before you sell your old one? Both will cost you
money and aggravation, but there are options.
Interim Housing
Research short-term rental and storage options (family, friends,
storage facilities, containers). Talk to school officials in
your new neighborhood. They may allow your children to start the
next semester in what will be their new school, if you have an
offer pending in the neighborhood.
Financing
Bridge financing is a loan for the down payment on a new home
backed by the equity in your old house, typically at prime plus
two percentage points. While helpful, bridge financing can be
expensive. If you have good credit but your income isn't high
enough for you to qualify to carry a bridge loan plus both
mortgage payments, consider a no-ratio mortgage, which doesn't
take into account your debt-to-income ratio. Rates are higher
but you can refinance later.
Alternatively, you may be able to draw on a home equity line of
credit on your old home. Rates are often more than a point lower
than on bridge loans. But you might pay a penalty fee if you
sell the house less than a year after taking out the line of
credit.
For more information on buying and selling a home, visit http://www.lendingtree.com/cec/yourhome/buying/buy-
and-sell-same-time.asp