The initial thought of moving for a homeowner raises a lot of questions. The biggest one being: Do I purchase a new home and then sell my current home, or should I sell my house and then find another? The answer to this question and many more dilemmas homeowners face depends on personal finance options and local market conditions, so consider some of these aspects when debating between buying first or selling first:
One initial factor to look at when considering a move is your financial options. Since it may be unlikely that you will be able to pay for your next home in cash, most buyers use the equity from their current home as a down payment on their future house. A common solution amongst homeowners is to sell your home and negotiate with the buyer to rent it back. Now while this is a great option, be mindful that you will need to pay them for the rental. On the other hand, you could temporarily live with family or loved ones while in-between properties, which is a cost-effective way to transition if you choose to sell first.
There are also things to consider when working with lenders. Some companies offer bridge loans for qualifying homeowners, which help with the transition depending on their credit score and equity in their current home. Talking with your real estate agent will help evaluate your options and find the best alternative for you.
Another important factor to consider is the current real estate market conditions. Working with a knowledgeable realtor on the current market, neighborhood, style and price range for your property educates you on the going rate for properties similar to yours. This will show you how quickly homes are selling and for how much – which is an important factor that will help you decide whether or not it is in your best interest to sell or buy first.
At the end of it all, you simply have to decide which thought you are most comfortable with: selling first and possibly having to wait to find a home you like, or buying first and possibly taking on two mortgage payments at once. Luckily, your real estate team will be there to help you determine which path is right for you.