Whether you want to sell your house and buy a new one because of a job transfer, a better school district or your current home isn’t big enough for your growing family – moving can be stressful.
The stress only multiplies when you need to sell your current home at the same time.
We have steps you can follow to simplify the home buying process and make it an (almost) painless experience. But before we can detail the steps, let’s review some important factors to consider.
There are several schools of thought when deciding whether to buy or sell a house first.
If you’re selling a house with a mortgage, some people say you should sell your current home first to avoid getting stuck with two mortgages at the same time. Others say you should wait to sell later so you’re not between homes.
Let’s look at some pros and cons of buying a new house before selling the home where you live.
The most obvious pro of buying a house before selling your current one is that you have a place to go after you sell your place. You won’t pay for moving expenses twice. And you won’t live out of boxes until you buy a new home.
It’s best to avoid the potential frustration of scrambling to find a short-term rental, especially if you also need to manage pets, kids or heavy furniture like a grand piano. And many places don’t allow month-to-month rentals for new tenants, so you may end up paying for several months of rent even if you only need to stay for 1 month.
Not selling your house before you buy your next one could leave you on the hook for two mortgage payments at the same time. Homeowners need to either plan how to pay for two mortgages at once or make a plan to sell their house fast. Homeowners may struggle to afford two mortgages and other expenses, especially if it takes more time than estimated to sell the home.
Now let’s look at the pros and cons of selling your current home before buying a new one.
You won’t be responsible for paying two mortgages at once when you sell your home before buying a new one.Selling first may help you feel less rushed about deciding on your new home, especially if you’ve locked in where you’re going to stay after the closing date.
When you sell a home before buying one, you risk not finding a new one that fits your lifestyle and budget. Some homeowners only realize after selling their home that they may have been better off staying put and remodeling.
Whether you decide to sell your current home first or buy your new house first, the steps you must take are the same.
In a perfect world, you’d transition from a seller’s market to a buyer’s market. In a seller’s market, you may get thehighest selling price for your house. In a buyer’s market, you may purchase your new home for a steep bargain.
So many factors affect the housing market. Even individual cities have hyperlocal housing markets. An area with good schools may always be a seller’s market, while a suburb with rising crime rates may become a buyer’s market.
Some seasons are better for a move than others. The late spring and summer are popular, especially for families that don’t want to move during the school year. Winter is generally slow, especially in areas with heavy snowfall. Talk to a real estate agent to see if there are seasonal or weather-related factors you should be aware of.
Even if it’s not the best time to put your house on the market, you can prep your home for sale. The sooner you prepare, the smoother the process will be once you get going.
You can do several things to attractively stage your home and sell it.
Any homeowner who’s lived in their home for a while knows how much stuff can pile up over the years. Even if you’re weeks or months away from listing your house, use the time to declutter and throw away items you don’t want in your new home. Getting your home ready is your first major step and shouldn’t be taken lightly.
You may have to make a few difficult decisions. But when you’re unsure about an item, ask yourself, “Do I want to move with this in a few weeks?” If the answer is no, toss it. You can also set up a yard sale to make money from your discarded belongings.
Make any necessary repairs or cosmetic upgrades before you list your home. Go around the house and patch up any big holes. If you can afford it and have enough time, consider freshening up a few strategic rooms with a fresh coat of paint, installing new hardware on doors and drawers and other cosmetic updates that may boost your home’s value .
Use this time to evaluate your finances. Think about working with a mortgage lender to get preapproved so you can move quickly when you find your new home.
With preapproval, you’ll know how much you can afford for a new house, especially if you’re looking at a more expensive property.
And if you’re thinking about a bigger home, it may be time to think about buying more furniture. Be careful about overspending, especially if you plan on financing your new furnishings with a credit card. When applying for mortgages, you need to keep your debt-to-income ratio (DTI) at or below your lender’s qualifying threshold.
When you list a home with a professional real estate agent, you’ll always have someone to answer your questions and help you figure out any situations. Agents usually help with the following:
Most homeowners can’t afford to buy a new house without selling their current home first or selling and buying atthe same time. You may struggle to make a down payment if you buy a house before you sell your current one. Make sure you know your financial options before you start the financing process.
A home equity line of credit (HELOC) is one way to get the cash. A HELOC uses the value of a home as thecollateral for the line of credit. When you take out a HELOC, you can use the funds as the down payment on your next home. And when you sell your house, you can repay the HELOC with the proceeds.
Please note that Rocket Mortgage ® doesn't offer HELOCs at this time.
A bridge loan can help you bridge the gap between buying a new home and selling your current home. A bridge loan is a type of personal loan. You can repay the loan when you close on your old house.
Please note that Rocket Mortgage doesn't offer bridge loans at this time.
If you’re moving within the same city, you can use the same agent to sell your current house and buy your new one. If you’re moving to a new area, you should work with a new real estate agent. An agent is especially important here because they’ll know the area well.
A good agent should understand your needs. They should also be able to help you find temporary housing if you need somewhere else to stay between selling your house and closing on your new one.
If you’re buying your new house in a seller’s market, you may not be able to see homes in person until you make an offer. While buying a house without seeing it isn’t ideal, a good agent can help you figure out the logistics.
The right agent should also understand what kind of house and neighborhood you want to live in. Do you need a good school for your 6-year-old? Do you want to live in a quiet neighborhood because you work at home? Or do you need to live near a park to take your Siberian Husky for a run?
Make a list of what you like and don’t like about your current home and neighborhood. Your preferences will help narrow down the field.
Use our steps to make buying and selling a home at the same time less stressful. Before making a decision and proceeding to any steps, weigh the pros and cons of buying a new house before you sell your current one – and vice versa.
If you’re ready to buy a new home, start your mortgage application with a Home Loan Expert at Rocket Mortgage today.