How to Buy and Sell a Home at the Same Time—Without Losing Your Mind

Ah, to be a first-time home buyer again: How easy it was to buy a home when you weren’t carrying another mortgage on your back at the same time!

If you’re looking to graduate from first-timer to repeat buyer, you know things are about to get much trickier. Unless you’re a bona fide house collector, you’ll have to sell your home in order to buy anew—adding a whole separate layer of anxiety to what you already know is a stressful home-buying process.

In an ideal world, you’d buy a new home, move, and then, when all the dust settles, deal with the turmoil of selling.

But for most people, that’s totally unrealistic. Not only does it cost a lot, since you’ll be paying two mortgages at the same time, but sellers of your potential new home might be quick to judge if you’re holding on to your current home.

Drew Snyder, a Realtor® with Snyder Sutton Real Estate in Topanga, CA, says one of his clients had difficulty getting sellers to “take them seriously unless the house was on the market or in escrow. As soon as we put it on [the market], they were considered as serious buyers.”

So, while shopping for a new home and selling your current home at once may sound like a real estate nightmare, it may be your best option.

Here’s what you need to know to make sure both processes go as smoothly as possible.

Know the market first

Before you start seriously searching for a new home—or put your current home on the market—make sure you have a solid understanding of the housing market in your area (and the area where you’re planning to buy).

Ask your real estate agent: Is the market weighted toward buyers or sellers? Only then will you be able to fully strategize. In real estate, your best plan of action may depending on whether sellers or buyers are in the more powerful position.

One way to play it safe is to keep your mind open to lots of buying options. If it’s a seller’s market, you might find that you’re able to get your home sold quickly, but that the homes you tour with your real estate agent just aren’t up to par.

If you can widen your search and find multiple homes you’re interested in, you’re less likely to find yourself in trouble if a purchase falls through—selling your current home won’t leave you stranded.

Another way to protect yourself is to hire an appraiser and price your old home fairly.

If it’s a buyer’s market, you have to know that your home has lots of competition. You may not have the time or energy to update your home, but one thing you can do is set a reasonable price that will get buyers interested.

Now is decidedly not the time for delusions of grandeur: Two extra months on the market because you couldn’t humble yourself to lower the price means two months that you’ll be paying double mortgages. Two very long months…

Plan your schedule carefully…

You might be asking: Should you try to buy first, then sell—or vice versa? Both have their risks and rewards.

Selling first makes getting a mortgage easier, but it also means you’ll need to find a temporary place to live.

Buying first means that moving will be easier, but it also skews your debt-to-income ratio, making it harder to qualify for a new mortgage—not to mention the difficulty of juggling two monthly house payments.

Your down payment can be difficult to come up with, too, if all your money is tied up in your old home.

“It’s walking a tightrope,” says Gary DiMauro, a Realtor in New York’s Hudson Valley. And he’s not just talking about scheduling: Your finances will be on the high wire, too.

When determining whether you should sell or buy first, think beyond “How can I make the move as easy as possible?” Instead ask: “Can I handle two mortgages? What if my home sells for less than its listing price?”

Whichever option you choose, make sure you’re prepared to accept the consequences: either having to store your stuff and rent temporarily, or undergoing the financial burden of dual mortgages.

… but don’t rely on timing

When buying and selling a home simultaneously, “There are so many external circumstances,” says DiMauro. “I’ve yet to see it really work smoothly and efficiently.”

Remember: You’re not the only party in this equation. For every seller there’s a buyer, for every buyer a seller.

While things might appear to be working smoothly when viewing your master plan from above, that doesn’t take into account the varying fortunes of the people you will be working with.

Closings are rife with delays. Your buyers might have difficulty securing their mortgage; your home inspector may bring up issues that need to be fixed before you can move in.

“You’re relying on the seller of the place that you’re buying to be ready to move, in concert with the buyer of your house,” DiMauro says.

So even if you’ve planned to sell your home first and are prepared to rent while buying, know that even the best-laid plans go awry—and that you might end up juggling both mortgages. Preparing yourself for this (however remote) possibility ahead of time will ensure a smooth transition.

Know your financial solutions

For those who choose to sell first, the process is relatively straightforward: taking on the additional cost of a rental between homes.

However, you might want to consider the option of a rent-back agreement, where you negotiate with the lenders and buyers to be able to remain in the property for a maximum of 60 to 90 days—often in exchange for a lower selling price or for rent paid to the buyers.

This can relieve some of the pressure of finding a new home, giving you additional time to house hunt.

But if you’re buying first, talk to your Realtor about ways to decrease your financial burden and risk. Here are the two most popular options for buyers:

  • Contract contingency: Buyers can request that their new home purchase be dependent on the successful sale of their old home. If you’re looking in a competitive market, this may not be a good option. However, if the seller of your intended home has had difficulty attracting interest, this may be a good deal for all parties involved—assuming that you can persuade them that your home will sell quickly.
  • Bridge loan: A bridge loan allows you to own two homes simultaneously if you don’t have deep pockets for a second down payment. This option is especially attractive if you’d planned to sell your home first and use the proceeds to buy the second. It functions as a short-term loan, intended to be repaid upon the sale of your original house.

Don’t let fear rush you

If your home has sold but you haven’t found a new place to live, don’t let anxiety push you toward a bad decision.

DiMauro usually recommends that his clients preemptively plan on a short-term rental “so they don’t feel stressed or pushed into something that they would not normally be interested in,” he says.

“They shouldn’t make a purchase because they felt like they were pressured from the time constraints.”

Found the perfect home right on schedule? That’s great. But don’t feel that you have to compromise on things that are important to you just because you need to find a home.

Conversely, don’t accept a bid that you feel is too low just because your finances are strained by two mortgages. If you have a temporary apartment set up, you’re less likely to compromise.

Certainly, selling and buying a house simultaneously will be stressful—but carefully considering and planning for the risks and hurdles can mitigate the stress.

Source: realtor.com

Top 6 Home Buying Risks To Avoid

June 22, 2019 Posted By: growth-rapidly Tag: Buying a house

Buying a home, especially as a first time home buyer, while can be an exciting time, can be a scary, stressful and expensive process. That’s why it’s important to be aware of the risks involved. By having an idea of what you may encounter when buying a home, you can take steps to avoid them. If you think you’re ready to buy a house, here are some home buying risks to avoid.

If you are interested in comparing the best mortgage rates through LendingTree click here. It’s completely free.

Check out: 5 Signs You’re Not Ready to Buy a House

If the process of buying a home seems complicated to you, it may make sense to speak with a professional. The SmartAdvisor free matching tool can connect you with up to three financial advisors in your neighborhood.

1. Obtaining the wrong mortgage.

The worst thing you can do when buying a house is to obtain the wrong home loan. A bad mortgage loan can be one with a high interest rate, which means that your monthly payments are higher. You also have to pay more in interest over the term of the loan.

The people who find themselves in this kind of situation are those who fail to shop for multiple mortgage lenders before deciding on one.

Not all mortgage loans are created equal. Mortgage rates and fees may differ from lender to lender. So to avoid this risk, you should plan to compare several mortgage rates. While the mortgage process can be overwhelming at times, you can navigate the process by comparing home loans side by side through LendingTree.


LendingTree: A Better Way to Find A Mortgage

LendingTree.com is making getting a mortgage loan simpler, faster, and more accessible. Compare the best mortgage rates from multiple mortgage lenders all in one place and at the same time. LEARN MORE ON LENDINGTREE.COM >>>


2. You don’t have any job security.

Another of the several home buying risks to avoid is to make sure you have a stable job with a steady paycheck so you can make your payments on time.

Unless you were able to purchase your home with all cash, you will need to make monthly mortgage payments to satisfy your loan requirements.

In addition, you will need to consider additional expenses, like money to replace the roof or to renovate the kitchen and bathroom. Therefore you will need a steady paycheck or stream of income.

So before you jump into homeownership, make sure you have a stable job.

Related: Apply for a Mortgage Loan Today

3. You forget about other costs.

First time home buyers may think that buying a house only involves finding and getting a mortgage loan, coming up with a down payment, making an offer on a house that they like, and preparing for closing.

However, they may not realize that there are other costs that come with buying a house.

In addition to the down payment and mortgage payments, they need to come up with closing costs, inspection costs, moving costs, maintenance costs, taxes, etc… And if you don’t consider and budget for these costs, you may be in hot water.

4. Buying a home full with problems.

You may have found a house you’ve always dreamed about. But it’s never good idea to purchase a home without conducting a building inspection.

A house inspection is crucial, because it can let you know of a lot of problems that you as a first time home buyer would have never thought existed.

It can reveal problems with the structure of the house, the roof, plumbing, electricity, etc.

Click here to compare mortgage rates through LendingTree. It’s completely FREE.

If you ignore house inspection and move in anyway, these issues can end up cost you a lot of money and can also be detrimental to your safety and well-being.

In conclusion, buying a home can be a fun and exciting experience. It can also come with unique challenges. By being aware of these home buying risks, you can take steps to avoid them.

More articles on buying a house:

The Biggest Mistakes Millennials Make When Buying a House

How Much House Can I Afford

5 Signs You’re Better Off Renting

10 First Time Home Buyer Mistakes to Avoid

Not All Mortgage Lenders Are Created Equally

When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>

Source: growthrapidly.com

Resources For The First Time Home Buyer

Home Buyer resources

For many people who live in the U.S., homeownership has long been touted as being a significant portion of The American Dream. As a result this is a goal that many Americans strive for and eventually the decision is made to enter the world of homeownership. This is often one of the biggest decisions of a person’s life, and it can also have the biggest impact on both the relationships and finances of the potential new home buyer. To make this a positive impact versus a negative one a person must take the right steps based off of educated decisions. Fortunately there are many resources available to offer assistance.

Before taking the first step towards becoming a home buyer a person must be positive that it is the best move for his or her lifestyle and finances at the moment. Although home ownership is the goal for many, it is not the best choice for everyone. For some, renting is seen as a more desirable option for them. To make the decision to become a homeowner a person must take a close and honest look at the advantages and disadvantages of homeownership in relation to their personal circumstances. When considering buying a home one must determine if all of the expenses that are associated with homeownership will put them at a financial disadvantage. Property taxes, mortgage payments, and maintenance costs are just a few of the home expenses that a person must consider. He or she must calculate whether these will take too much from their income and if they are willing to make the necessary sacrifices in order to afford them. Home ownership may also not be the best option for people who are not stable in terms of settling in one spot. A person who frequently moves due to work or other circumstances should consider the hassle and potential loss in home value if they must move and put their home up for sale. Advantages to home ownership are plentiful. For people who are financially able to manage the cost of buying a home, they can enjoy the tax deduction that comes from the interest paid on their mortgage payments and from property taxes. The idea of setting roots in an area is also an appealing advantage, particularly for people with children or for people who are starting a family.

Home buyer resources

Once the decision has been made to purchase a home, it is important to know what to look for in choosing the right home. Creating a checklist will help make it easier to find the perfect home. Location should figure high on the list such as the safety of the neighborhood, whether it is in a quiet area, and its proximity to quality schools, shopping, and one’s employment. Details such as the number of bedrooms and bathrooms, floors, property tax, and the presence of a home owners association must also be considered. To help reduce future home expenses associated with repairs, look for homes that have been well maintained in terms of the home itself and the yard. Obtaining a mortgage is one, if not the, most important steps that a home buyer must complete. A person should begin the process of obtaining a loan as much as a year in advance. This allows him or her to get their finances in order as they may be required to put down a down payment anywhere between five and 20 percent. For this reason, the home buyer should also be prepared to shop around for the best rates and terms that he or she can get. One of the best ways to shop for a home is to get pre-approval prior to starting one’s search. This lets the seller know that the buyer has been evaluated by the lender and what the loan amount is.

By Kelly Anderson

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