Moving is always stressful, whether you want to sell your house and buy a new one because of a job transfer, you need to move to a better school district ,or your current house isn’t big enough for your burgeoning family.
Buying a house is commonly known as one of the most stressful life events you can go through, but it’s doubled when you're trying to sell your current home at the same time. It’s like playing a game of mortgage chicken.
But if you follow these steps, you can simplify the process, lower your stress and make it a (nearly) painless experience:
Should You Buy Or Sell First?
There are several schools of thought when deciding whether to buy or sell a house first, and each person will have his or her own considerations. Some people say you should sell first so you’re not stuck with two mortgages at the same time. Others say you should wait to sell later so you’re not in between homes.
Buying Before Selling
The most obvious pro about buying a house before selling your current one is that you know you’ll have a place to go when you sell your place. There’s nothing more frustrating than having to find a short-term rental, especially if you have pets, kids or heavy furniture like a piano. Many places don’t allow month-to-month rentals if you’re a new tenant which means you may have to pay for multiple months of rent even if you only need a month.
Plus, if you have a home to move into, then you won’t have to pay for moving expenses twice. You also won’t have to worry about living out of boxes.
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 have a plan for how they’ll pay for two mortgages. This could be financially devastating, especially if selling your home proves harder than you realized.
Selling Before Buying
When you sell your home before buying a new one, you’re no longer on the hook for paying two mortgages at once. This means you don’t have to feel rushed into making a housing decision. If you have somewhere to stay after closing, then you can also take your time and make sure your next home purchase is the right one.
When you sell a home before buying one, you’re leaving it up to chance that you’ll find something that fits your lifestyle and your budget. Some people have discovered through the process of selling their home that they’re better off staying put and remodeling.
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6 Steps Of Buying And Selling A Home At (Relatively) The Same Time
Whether you decide to sell your home first or buy your next house first, the steps to take are the same.
Step 1: Assess The Market For Your Current And Prospective Home
In a perfect world, you’d move from a seller’s market to a city that has a buyer’s market. The situation lets you achieve the highest selling price for your house and the lowest buying price for your new home.
In reality, there are many factors that affect the housing market. Even different cities may have hyperlocal housing markets. An area with good schools may always be a seller’s market, while a suburb with an increase in crime may suddenly be a buyer’s market.
Step 2: Decide If Now Is The Right Time To Make A Move
Some seasons are better for home buyers than others. The late spring and summer are popular, especially with families who don’t want to move during the school year. Winter is generally slow, especially in areas with heavy snowfall. You should also talk to the real estate agent to see if there are any other factors you should be aware of.
Even if it’s not the best time to put the house on the market, you can still get it ready to sell. The sooner you’re prepared, the easier the process will be once you actually get it going.
Step 3: Prepare Your Home To Show Well
Any homeowner who’s lived at their current home for a while knows how much stuff is in their house. Even if you’re weeks or months away from listing your house, take this time to declutter and throw away anything you don’t want to take with you. The process of getting your home ready is the first major step and shouldn’t be taken lightly.
When you’re unsure if you want to get rid of an item, ask yourself, “Do I want to move this in a few weeks?” If the answer is no, toss it. You can also set up a yard sale to make some money from those unwanted items.
Go around the house and fix up any big holes. If you have a room that’s painted a bright color, pick a neutral color to repaint it.
Use this time to work on your finances. Talk to a mortgage lender about what you need to do to become a better applicant. This may include saving up a bigger down payment, fixing mistakes on your credit report or repaying debt to improve your debt-to-income ratio.
You should also view your credit score and make sure it’s good enough to qualify for a mortgage, especially if you’re upgrading to a more expensive house.
If you’re moving into a bigger house, you may want to buy more furniture.
Step 4: List Your Home With A Local Real Estate Agent
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 your situation. First, they can help with staging your home and deciding what changes to make. They can find the right photographer and staging expert so your home looks its best.
Next, they’ll be responsible for finding buyers, listing the open house and showing the home when you’re not around. They can also network with other agents to market your home.
A real estate agent who knows the neighborhood and the market can price the home appropriately so it’s not sitting unnoticed for weeks and weeks. This can save you a lot of time and headache.
When you sell the home, they can also help you find temporary housing to stay in while your next home is being prepared. This also helps if you’re planning to buy your next house only after closing on your current one.
If you can’t sell your current house but still want to move, they might even be able to find you a long-term tenant so you’re not juggling two house payments at once.
Step 5: Start Looking For Your New Home
If you’re moving within the same city, you can use the same agent to both sell your current house and buy your new one. But if you’re moving to a new area, then you’ll need to find a new real estate agent. An agent is especially important here because they know the area better.
A good agent should understand your needs in this case. They should also be able to help you find housing if you’re going to need somewhere else to stay in between selling your house and closing on your new one.
If you’re buying your new house in a seller’s market, then you may struggle with seeing the homes in person before making an offer. While it’s not ideal to buy a house without seeing it, a good agent can help you figure out the logistics.
The right agent should also understand what kind of house and neighborhood you’re looking for. Do you need good schools for your 6-year-old? Do you want a quiet neighborhood because you work at home? Or do you want a park nearby where you can take your Husky for a run?
Make a list of what you like about your current house and neighborhood and what you don’t. This will help narrow down the field.
Step 6: Begin The Process Of Applying For Financing
Most homeowners can’t afford to buy a house without selling their original home first or at the same time. If you buy a house before you sold your current one, then you may struggle to come up with the down payment. Make sure you know what your financial options are 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 your home as collateral for the loan. When you take out a HELOC, you can use the funds as the down payment on your next home. Then, when you sell your house, you’ll repay the HELOC with the proceeds.
A bridge loan, like it sounds, can help bridge the gap between now and when your home is sold. A bridge loan is a type of personal loan that will be repaid whenever you close on your old house.
Summary: You’ve Got This!
If you’re feeling overwhelmed or uncertain, the best thing to do is to talk to a mortgage professional who can answer your questions. They can tell you what kind of mortgage you qualify for, which can narrow down the home shopping process.
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