Buying a Home or Selling One: What Comes First?—Problem Solved
Buying a home, at some point in time, we get to face the real dilemmas of; moving in, down-payments, the whole paperwork and so much more. But one interesting question that always comes to our heads is: How can I handle the sale of my old home and the purchase of a new one properly? And we would love to provide those answers right now, take a look.
First, you need to know exactly what will come first, because there are some solutions if you are buying a home before selling¹, and another (very different) ones if you are selling before buying², let’s keep that in mind. Aside from the fact that the second case is more manageable than the first, we understand that every situation is unique and must be treated as such.
Buying a home before selling¹, you can count on three very useful approaches:
- To take a bridge loan: This tool will be helpful at dealing with the financial weight of acquiring a new property. Designed as short-term loans, you’ll be able to pay off the mortgage of your own house, so when it gets sold, the proceeds can be redirected to pay these bridge loans.
- Home sale contingency: In your offer, you could set a period of time to find a buyer for the old house before moving out to the new one. A not so famous option, but has proven to be very flexible since you can extend or terminate the contract if a buyer does not appear.
- Double deal: A very safe measure is to hold both properties, in this way you don’t have to worry about taking additional loans, although this plan may be more difficult to afford.
When the scenario is contrary and you decide to sell your old house before buying a new one, these would be your best options:
- Rent-back request: You didn’t read that wrong, this measure will allow you to rent your old house meanwhile you make all the arrangements in order to move out. Working more as a favor, you are able to ask for it as the actual owner has the freedom to deny or accept your proposal.
- Pick your dates wisely: To make your transition smoothly, you need to match the settlement date on your new home with the closing day of your old one.
- Rent for a short term: These can be more expensive than long-term rentals, but it will surely function as an easy catch in case that all of the other solutions fall short.
No buyer’s manual has been created up to this point, considering all the options available is the best advice we can give to all of our clients. Once you know which of the mentioned solutions is the best fit for you, planning shouldn’t be a problem.