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It can be daunting to sell your current home and buy another home at the same time. Who wants to pay two mortgages or move twice? Use our tips below to help you get organized and plan your move, so everything goes smoothly.
Teamwork Is Important
Use the professionals you have hired to ease you through the process: your real estate agent, lawyer, lender, appraiser, inspectors, movers, etc. To make sure everyone is on the same page, keep communication open with all those involved. Use a notebook to record the dates and details of phone and face-to-face discussions and transactions. Also instruct your real estate agent to let you know about problems as soon as they occur so you can work them out together.
When Selling
Deciding when to put your home on the market can be the toughest decision. Listing your house as far in advance as possible makes it more likely that you will sell before you buy, meaning only one mortgage to pay. Consider having a home inspection to uncover any underlying issues that you can repair or adjust for in your asking price before you list your home.
When deciding on offers, require the buyer to be pre-approved within five to 10 days of accepting their offer. That way, if the buyer can’t proceed, you haven't wasted much time and, when you make an offer on a new home, you will know that the financing conditions on your existing home have been satisfied. Also, don’t overlook a slightly lower offer that allows you more flexibility with respect to your closing date. For example, if your top bidder has to sell their current house first, you might prefer to deal with a first-time homebuyer or renter.
A long close or a rent-back option can give you more time to find your new home. This allows you to stay in the house as a renter without the headache of an interim move.
When Buying
Buying seems like it would be the easier part of the transaction, but remember you may need some of the equity in your current home for the down payment on your new home. Assess if you have enough for a down payment, decide what you can afford, and get pre-approved for a mortgage so you can act fast when you find a house.
Check what’s available in your price range before putting your home on the market. If there’s little available, you may want to buy first and ask for a long close. Have the property thoroughly inspected and make sure it can be insured before you make your offer.
Trading spaces is complicated, so it’s important to have a back-up plan. What if there’s a hitch and you have to sell before you find something you want to buy, or you find the perfect house before you sell your old one? Both will cost you money and aggravation, but there are options.
Interim Housing
Research short-term rental and storage options (family, friends, storage facilities, containers). Talk to school officials in your new neighborhood. They may allow your children to start the next semester in what will be their new school, if you have an offer pending in the neighborhood.
Financing
Bridge financing is a loan for the down payment on a new home backed by the equity in your old house, typically at prime plus two percentage points. While helpful, bridge financing can be expensive. If you have good credit but your income isn’t high enough for you to qualify to carry a bridge loan plus both mortgage payments, consider a no-ratio mortgage, which doesn’t take into account your debt-to-income ratio. Rates are higher but you can refinance later.
Alternatively, you may be able to draw on a home equity line of credit on your old home. Rates are often more than a point lower than on bridge loans. But you might pay a penalty fee if you sell the house less than a year after taking out the line of credit.
For more information on buying and selling a home, visit http://www.lendingtree.com/cec/yourhome/buying/buy-and-sell-same-time.asp
About the Author:
The editorial staff at LendingTree is committed to helping consumers become smarter borrowers. Visit http://www.lendingtree.com/cec for more information and tips on buying, selling, and financing a home. Copyright 1998-2009-2015, LendingTree, LLC.
Source: www.isnare.com
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