For homeowners looking to move on to a new place, deciding when to sell their current home is a big choice. To help you choose whether to purchase before or after selling, we’ll list the pros and cons of each so you can decide which is best for you.
Selling Before Buying
If you’re considering selling your current home before purchasing a new one, here are some pros and cons to mull over:
The equity in your current home may go toward the down payment for your new one.
Strict timelines aren’t an issue; if you can’t find a new home that meets your needs right away, you don’t need to feel forced to settle by a certain date.
You have the time and ability to negotiate. No need to accept the first offer you receive for your current home.
Listing your home too early could lead to a premature purchase before you have a new place to live, which could force you to seek short-term housing in the meantime.
If you do have to find short-term housing, you will end up having to move your things twice.
If you do decide that selling before buying is for you, there are some options available to help you avoid the cons:
You can make the sale of your home contingent on finding your ideal new home.
You can negotiate with the buyers of your old home to allow you to lease back the home for a month after closing so you have time to find a new place.
You can schedule the closings of your old and new home to be concurrent.
Buying Before Selling
On the other hand, here are the pros and cons to buying a new home before selling your old one:
Currently, it’s a seller’s market; therefore, homes are selling quickly. When you put your old house on the market, it could sell within days, leaving you with little risk of buying your new home first.
You could find a great deal that may be gone if you wait to sell your old home.
Your offer may be contingent on the sale of your old home, and this could be an issue if you are depending on the equity for the down payment of your new home.
You may have to be able to qualify for two mortgages.
That said, you may end up with two mortgages for a time.
As before, there are options to help you avoid the cons of buying before selling:
- You can put down 10% and open a home equity line of credit for the remaining 10%. Then you can pay off the credit line when your home sells.
You can use low-down-payment loans in the instance that two mortgages becomes your reality.
You can make a contingent offer in which you agree to buy the new home only if your current home sells. (Although, sellers can consider other offers even after they’ve accepted a contingent offer, possibly dropping your contingency for the uninhibited offer).
No matter which route you choose to take for your new home purchase, making a plan can get you where you want to be.
Are you interested in buying a new home? Did you know that CNE is a certified mortgage lender? Contact our Community Mortgage Advisor (firstname.lastname@example.org) today to see the loan products we have to offer and find one that works best for you!