Buy Before You Sell? Here's What You Need to Know
One of the biggest questions I get from people thinking of moving is how do I coordinate my sale with the purchase of a new home?
I understand this can feel like a daunting task, the thought of selling your home quickly and not being able to line up closings, the worry over having two mortgage payments, and what if you can’t find a house you even like is enough to make anyone stay put.
It’s important to know your options before deciding on a course of action when you need to sell your home in order to buy the next one, especially if you don’t like the feeling of being homeless.
1. The Traditional Route- Sell First Then Buy.
When your home is on the market, you can make an offer on a purchase with either a home sale (if you don’t have an offer on your home) or home close (if your home is under contract) contingency. Both are possible, but in a seller’s market where it’s competitive, most sellers won’t like either options on your offer. There are still ways to get under contract even if you have one of these contingencies, though!
Pros: You have access to your equity (the funds from your sale) to put into your new home. You’ll know exactly how much you can budget for your downpayment for your next home, since the sale price of your home is a known entity.
Cons: If you don’t find a home you want to purchase right away, there may be a need for temporary housing such as extended stay, short term rental, or living with family. The market is constantly changing and if interest rates increase, or sales prices increase, your purchasing power is suddenly diminished.
2. Bridge Loans: Financing the Gap
This is a short term loan that provides funds for a downpayment before selling your home.
Pros: You have time to find and purchase a home without pressure. Can prevent missed opportunities in a competitive market.
Cons: Depending on the length of time you’re utilizing the loan, there is increased debt and interest payments. Qualification requirements can be stringent.
3. Origin Point Mortgage’s Buy Before You Sell Program
This is a specific bridge loan program offered to ease the transition, allowing buyers to tap into their current home’s equity in order to make an offer before their home sells, and most importantly, without a home sale/close contingency.
Key Features: No interest or payments on the bridge loan until the current home is sold. The Bridge Loan does not impact debt-to-income ratio for the new mortgage. Strengthens your options as a buyer due to the no contingency offer.
Idea For: Homeowners with substantial equity in their current property. Buyers who need to move quickly in competitive markets.
Curious about the Origin Point Buy Before You Sell Program? Click here to contact our local Origin Point lender, Alex, to get more information.
