Making a move from one house to another is often a necessary step in life, whether you’re downsizing or opting for a larger space. It can be a daunting process, but with a bit of knowledge, you can sell your home and move to the next smoothly.
If you’ve found your dream home and want to purchase it before someone else makes a bid or are moving to a new area after accepting a job offer, you may find yourself in a situation where you’d like to purchase a home, but you have yet to list or sell your current home.
You have several options when deciding how to proceed, with both advantages and drawbacks to each.
Adding a sale and settlement contingency clause to your offer’s terms allows you to buy your new home only if your current one sells. If the clause’s term specifies a given timeframe for you to sell your home, and you aren’t able to find a buyer for your old home in the allotted time, the terms can state that the offer and contract for the new home are voided.
A home sale contingency allows you to enjoy a variety of benefits.
However, a contingency offer also has some drawbacks.
Even if your home isn’t selling as quickly as you’d like, you can still make a profit by renting out your current house while it’s still on the market. If you can find renters who will pay more per month than the costs of your monthly mortgage and home upkeep, renting out your current home could be a good option.
Renting out your current home offers several potential pros if you’re on a budget.
The cons of renting out your home include:
Sale-leasebacks allow you to sell your old home but remain there as a tenant until you settle on your new home. The terms of the lease — such as monthly rent and length of the leaseback — are agreed upon by you and the buyer as part of the negotiations.
A sale-leaseback transaction offers several benefits if you’re not quite ready to move out of your old home.
You’ll also want to consider the cons, though, before choosing a sale-leaseback agreement as an option.
Buying before selling gives you the advantage of taking your time to find your dream home and not rushing into a new house just because your old one sold. It may also eliminate the process of adding an additional temporary move during the interim period, allowing you to simply move from one home to the other.
What makes this tricky in some situations is that you won’t have the money from selling your current home to put a down payment on your new home. This means you’ll either need to budget and save your money or borrow money for a down payment until your original home sells.
If you’re considering borrowing money for a down payment, you can contact one of our mortgage representatives to determine what loan choices are available to you, and what might be the best fit for your specific situation.
We want to help you reach your financial goals during your move from one home to the next. Check out our mortgage options today. And be sure to review our other money management tips for more information on home buying.