Buying and Selling at the Same Time

The Honest Truth

During this hot seller's market, selling your old home will be easy, while buying a new one could be more of a challenge. Unless you are a rare type of homeowner that is able to pay two mortgages at once, buying a new home while still owning your old one can be difficult.

If you are one of the many homeowners who cannot afford two mortgages at once, it is possible that you may find yourself in a state of limbo for a short period of time between your old and new house. But we are going to make sure you know the best way to sell your home and buy a new one without requiring temporary housing.

How Does Buying and Selling at the Same Time Work?

Yes, the home buying and selling process can be time consuming, but in the end, the long hours are worth it. You will have to dedicate your time to listing and selling your home and working with your real estate professional on how to properly market your listing. Due to the busy nature of selling a home, it can be difficult to sell and buy at the same time. Unless you can safely afford two mortgages at the same time, the best option is to sell your current home before buying another one to avoid any issues with owning two homes.

The first step you should take when attempting to buy and sell a house at the same time is to figure out what you can do financially. Talk to your mortgage lender about your options and what you can realistically afford. Your lender will help you determine if you are able to afford both mortgages at the same time or if you need to wait until you sell your current home to buy a new one.

Bridge Loans

A bridge home loan is a short-term loan used to "bridge the gap" between buying your next home and selling your current property. Many people want to buy a home before they sell so they are not panicking to find a house once they sell their home. But many buyers may not have enough money to purchase a new home, which is where a bridge loan comes into play. Buyers can use a bridge loan to buy a new house while still owning the old one.

Bridge loans do come with higher interest rates than traditional mortgage because of the risk involved. Borrowers will typically mortgage around 80 percent of both the current home and the new home's value. To qualify for a bridge loan, your lender will look at your credit score, your income, and how much equity is in your current home.

If a bridge loan is not feasible, you may want to consider a second mortgage.

If You Decide to Sell First:

• Clean, declutter, and stage your home.
• Take care of outstanding maintenance projects.
• Decide on various contingencies.
• Set the price for your home.
• Plan for a possible gap period between buying and selling.
• Work with an experienced agent and lender.

If You Decide to Buy First:

• Evaluate your finances.
• Figure out your home's current potential value.
• Talk to your agent and lender about the best ways to buy and sell at the same time.
• Consider a bridge loan.
• Be flexible with buyer and seller contingencies.