You’ve probably heard it by now; selling a home is in the top ten list of stressors in life. So, selling AND buying a home at the same time pretty much guarantees a few sleepless nights. You’re reading this, so chances are, that is exactly what you are attempting to do. On the positive side, it can be done.
Like the chicken and the egg, which comes first, buying or selling? Also, like the chicken and the egg, there isn’t a correct answer.
Buying before selling is appealing because it results in a move-in-ready house. But, buying first is only an option if you can make it work (obviously). There are a few ways to make it happen.
Be rich You’re swimming in money and can pay for a new house with cash. This includes closing costs and paying two mortgages until your house sells.
Borrow the down payment Maybe you are merely wading in money. Covering closing costs and two mortgages isn’t a problem, but covering the down payment, not so much. Bridge loans give you the money to purchase a home and pay it off after you sell your house. If you can get approved for a loan that covers the costs of buying a home without selling first, then go for it!
Make an offer with a contingency You can opt to make an offer that is contingent upon selling your home. This is only a possibility if there are no other offers on the house, or if your offer is higher than the others. If you make a high offer, the seller might decide it’s worth the risk of accepting it. But, remember that any contingencies weaken an offer.
Apply for a Home Equity Line of Credit (HELOC) Hopefully, the market is ripe and your current home’s value has increased significantly. If so, your bank will probably let you take out a home equity line of credit. This is a stash of money that you can dip into whenever you want, or need to. It’s backed by the equity in your home and is paid back with the proceeds from its sale.
Buying a new home before you’ve sold your “old” one can be a challenge, to put it mildly. However, if you can’t pass up the opportunity to own your dream house, buying now may well be worth the effort.