Upgrading from your current home to your dream home is a wonderful problem to have. I say problem, because it can be difficult to know how exactly to sell, when to buy, when to put in an offer, how to get it financed…. it can get muddled!
Let me share a few tips to help!
When you are selling a home IN ORDER to buy a new home, many people will make an offer with a contingency. This means that you put your current home on the market, go shopping for a new home, then put an offer in on that new home but with a contingency that basically says, “I’ll buy your home, but I have to sell my own home first!” Then, if your home doesn’t sell in the time allotted, you aren’t bound to TWO separate mortgage payments.
Another option is to essentially take a loan out of the equity of your home. Let’s say your house is worth $250,000, but you only owe $100,000. You can take out a loan against your home for a down payment on your new place. Once you’ve purchased your new place, you sell your existing home. With the cash from that sale, you pay off that loan.
This second option is riskier- you may end up with two mortgage payments for a period of time! If you choose this route, you’ll likely want to be more aggressive with the price you have on the home you are selling- price it to move, and fast!
Sometimes, the least stressful way to make this change is to sell your home, move in with good family or friends, and THEN go out to house shop with the money you have from the sale of your house. In some price brackets, typically under 300,000, this can be the best choice as sellers are less likely to accept an offer with a contingency that you’ll sell your current home.
Make sure to check the ACTUAL value of your existing home with a Realtor (Zillow Zestimates just won’t cut it!) against the amount you owe. Next, get qualified for a loan for the home you want that is based upon a conservative sale for your current home. Making sure to follow these two critical steps can help you to NOT be one of those people who are able to sell their home but then are unable to buy because of changes in qualifications for a loan program. Always, always, (did I mention ALWAYS!?) get pre-qualified for the home you want BEFORE putting your current home on the market!
Need to check the value of your home? Call Becca Summers! That’s literally what she’s here for!