You own a home and want to buy another – should you buy or sell first? Will you end up owning two homes or none at all? Here are some pros and cons to consider:
Buy A Home First
- Pros: Buying a home before you sell lets you find the right home for your needs without the stress of a closing date looming.
- Pros: You can make contingencies when you make an offer to purchase a home such as obtaining financing and the sale of your existing home within a certain time period.
- Cons: In buying a home, you could find yourself owning two homes at one time if your old home does not sell quick enough. Will you be able to secure a mortgage for the new home without selling and can you afford two mortgages?
- Cons: A contingency of selling a home before purchasing looks less attractive than other less restrictive offers to a seller. Your purchase offer may not be accepted.
Sell A Home First
- Pros: For many, with the sale of the home behind them, the stress level is lower. You have less risk with no double mortgages, property taxes and insurance payments.
- Pros: With no home to sell, you remove the contingency of having to sell from a buying contract. This makes your offer more attractive to the sellers of the home you want to buy.
- Pros: You know your home sale price which can help to determine how much you want to spend on a new home.
- Cons: The clock is now ticking to find a new home. Unless you are willing to consider temporary housing or have an agreement to a short-term “rent back”, you will need to be very focused on finding a home.
- Cons: If you need to move into temporary housing, you will be moving two times and find a place to store belongings.
Don’t Stress Out!
Most people find that the situation works out fine whether buying or selling first. Many who opt for temporary housing are usually waiting for their newly built homes to be completed.
Just Be Prepared
Whether you buy or sell first, you need to remember that timing is not always optimal when moving. You might have to consider temporary housing to fill in a gap period. Or, if you buy before selling your old home, you might need to consider a bridge loan to cover mortgage expenses until your current home sells.
How To Decide What To Do First?
Talk to your Realtor and Mortgage Loan Officer to see which path is best for your circumstances. They will consider your finances and current real estate conditions to help you make the best choice.