Tips for Selling and Buying a Home at the Same Time
Timing is everything when it comes to selling or buying a home, especially if you are doing the two simultaneously. If you are upgrading, downsizing or merely relocating, here are a few tips to consider before making the big move.
Talk to a mortgage consultant and get preapproved.
Before you begin the home-buying process, it is important to get preapproved for a mortgage loan to help determine your price point and ensure a smooth closing. “Interest rates are trending upwards, which adds complexity. The mortgage interest rate you obtain can impact the loan amount for which you may qualify,” said Ron Wivagg, national sales support manager of Prosperity Home Mortgage. Prosperity has a program called Lock, Shop & Home, which allows you to lock in your interest rate while shopping for a home for up to 90 days. This could be a valuable tool in a rising interest rate market, adds Wivagg.
Check with your mortgage consultant to see if you qualify for a new loan on top of your existing home loan or if you need to sell your current property first. If your existing house doesn’t sell before you close on your new home, you may consider a bridge loan, which can be used in between your two transactions.
Work alongside a professional real estate agent to plan and manage your transactions.
Try to plan your schedule ahead of time. Ideally, if you are selling and buying a home at the same time, you will close on your current home first and use equity in that home as a down payment for your new home, explains Wivagg. Based on your local market, your real estate agent will be able to tell you at what point in your home-selling process you should begin looking for a new home.
You may need to include a contingency in your transactions. Your local real estate agent can walk you through these contingencies and suggest if, or when, you should include one in your transaction. It is important to note that due to low inventory in many areas, properties on the market typically receive multiple offers and an offer with a contingency is not as appealing and may not be accepted. However, having a fully underwritten loan commitment preapproval is going to give you a leg up. Prosperity calls this a Buyer Advantage pre-approval, and it can help your offer standout when a seller is presented with multiple offers, explains Wivagg.
There are several components to selling and buying a home, and doing the two at the same time can be complicated. Planning is key. Timing, finances and experience are just a few factors to consider. Contact your local real estate agent to help guide you through the process.
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