Sell Old Home or Buy New Home First
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
Should You Sell Your Old Home or Buy a New One First?
When moving up or downsizing, homeowners often face a challenging decision: should they sell their current home first or purchase a new one? This dilemma doesn't have a one-size-fits-all solution, but exploring different strategies can help you decide what's best for your situation.
Assessing Your Options
Home of Choice Clause
If selling your home first is your preference to know the exact budget you have to work with, consider using a "home of choice" clause. This allows you to market your home with the condition that the sale is contingent on finding your desired new property. Typically, this clause lasts thirty days, but it can extend to as much as 60, 90, or even 120 days. It offers breathing room, reducing the pressure to find a new home immediately.
Home Equity Loan
A Home Equity Line of Credit (HELOC) can be a useful tool. By leveraging the equity in your current home, you can access funds for a down payment and closing costs on a new home. This allows you to make an offer on a new home contingent on selling your old one. If the seller isn't open to contingencies, you might be able to remove it if competition arises. With careful planning, this approach can help you manage two mortgage payments temporarily without financial strain.
Bridge Loan
If you're keen on purchasing a home before selling your current one, a bridge loan could be an option. This short-term loan, available if you have strong credit and significant equity, allows you to secure a new home without having sold your old one. While bridge loans typically carry high interest rates and last six months (renewable up to another six months), they can offer a solution to avoid losing a dream home.
Making the Decision
The right approach depends on your financial situation, market conditions, and personal preferences. Meeting with a lender to explore what's feasible for you can be a great starting point. The strategies outlined here may serve as a basis for discussion, helping you develop a plan that aligns perfectly with your needs.
In the end, whether you decide to sell first or buy first, understanding these options empowers you to make a more informed decision, turning what can be a complex process into a smoother transition.
You can find the original non-AI version of this article here: Sell Old Home or Buy New Home First .
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