Selling and buying a home at the same time is difficult in any market. It’s not just about logistics or coordination, though they are vital. It’s also tricky since closing simultaneously entails a risk from the seller of your new home.
There is no right or incorrect approach to buying and selling a home at the same time. Your options rely on your financial situation and risk tolerance. It also depends on whether you’re moving in a buyer’s or seller’s market. In this instance, you have several methods to try.
1. Get Pre-Approved for a Second Home Loan
Before shopping for a home, be sure you can afford both and are pre-approved for a loan. You must be able to afford both properties to be qualified to own two. For example, you may provide six months’ worth of mortgage payments for both residences.
You’ll also need money for a down payment and closing costs to establish you can own two residences simultaneously. You can borrow money or use your own. You won’t have to pay interest if you use cash, but you’ll deplete your savings quickly.
After you’ve bought your new home, you may move in and sell your old one or have it rented out until the market picks up again.
2. Sell Your Old Home and Re-Rent It
It is possible to reach an arrangement with the buyer of your house for a 30- to 60-day leasing agreement. This is called the rent-back contingency.
This enables you to buy and move into a new home within the grace period, making the purchase of your new home almost risk-free.
However, you may have to rent a new apartment if your home remains unsold within the rent-back period, and until such time you can buy your new home.
3. Examine Your Bridge Options
You may need to manage two mortgages at the same time. If your job is slowing down or you won’t be promoted anytime soon, you should look into alternative funding options.
It lets you utilize the equity in your present home to purchase a new one. It’s a short-term loan that must be repaid. These payments are usually higher than those on long-term loans, and late fines can be substantial. Selling your property to pay off debt will only lead to greater debt, which you must avoid.
4. Plan Ahead to Avoid Surprises
It’s why it’s best to plan before you put your house up for sale and you look for a new one to buy or mortgage.
For instance, you may be able to postpone the sale of your house so you can bid for a new property without first selling your old one. Another option is to sell your property for cash and put it as a downpayment for a new one.
If both you and the real estate agent are confident in the buyer’s capacity to complete the acquisition of your new home, you can also close on the same day as your new home.
No matter what strategy you use, you can simultaneously buy and sell homes with greater confidence if you have done the research and preparation beforehand.
In addition, talk to a knowledgeable real estate agent about buying a house with a home sale contingency.
Selling or purchasing a property is a personal decision. Consider the advantages, disadvantages, and expenses of each alternative for you and your family before you make that investment leap. Talk to your real estate advisor to guide you through the process.
At Sell for Cash AZ, we can help you sell your home fast and stress-free. We are cash home buyers in Arizona who will buy your house in any condition, regardless of what you owe or your situation. Partner with us today!