If you own a home but you want to buy a different one, the biggest decision you may have is whether to buy the new home first, or whether to sell your old one first. The right answer is not the same for everyone. These are some important issues to consider to help you make the right decision for your needs.
Selling Your Home First
One benefit of selling your home first is that you will likely have some extra money for a down payment on a new home. Another perk is that you will not have to pay for two mortgages at the same time. Also, you may not have to reduce the price of your home to sell it quickly. If you were paying for two mortgages, you might be tempted to reduce your selling price, if you are in an urgent need to sell.
However, if you sell first, you may feel pressured to find a new home quickly. If your temporary housing situation is stressful, you might wind up settling on a property that is not ideal for your current or future needs. Additionally, you will need to move twice instead of once. Storage, moving and related expenses can be hard to manage if you have a limited budget.
Buying a New Home First
The biggest benefit of buying a home before you sell your current one is you may not feel pressured to make a hasty decision when you are shopping for a new home. You will have time to wait for the one that is right for your needs.
At the same time, financing may be an obstacle if you choose to buy a home first. When lenders look at your credit, they consider your debt-to-income ratio, and your current mortgage is part of the equation. If you find a home that you want to buy and qualify for it but cannot sell your current home immediately, you may be able to turn it into a rental property until you can sell it. Another option is to make a contingency offer on the new home, which means that you will buy the new home if you can sell your current one by a specific date.
There are other considerations that come into play here. Is the housing market currently a buyer’s market or a seller’s market? If you are planning a long-distance move, you should research both markets carefully. A real estate professional can help you make the right plan and can advise you about current market trends, as well as predictions for the near future so you can make the right choice for you and your family. Call Sam McDadi at
(905) 502-1500, if you have any questions about buying or selling first.
