When buying a new home before selling your current one, it can be challenging to balance the process in the real estate market. However, it presents a great opportunity to find your dream home.
Understanding the Benefits
A significant advantage of buy before you sell program is the financial leverage gained from the equity of your current home. According to HomeLight’s Summer 2023 Top Agent Insights Survey, 49% of repeat buyers use the equity from their previous home sale to finance their next purchase. This equity increases the amount lenders are willing to offer and can simplify making a down payment or even purchasing the new home outright with cash.
Moreover, buying before selling offers practical benefits. The Orchard Blog highlights three key advantages: avoiding the need for temporary housing, the luxury of finding the perfect home without rushing, and the convenience of having your old home vacant for showings, making it easier to implement strategies on how to sell your house fast.
Facing the Challenges
However, the path to buying before selling is not without its obstacles. A primary concern is financing the new purchase before freeing up funds from your current home. As noted by HomeLight, this can make securing a down payment and meeting lender’s approval criteria more challenging. Additionally, the uncertainty of when your old home will sell brings financial and emotional stress, as you’ll be juggling the costs of two properties. Furthermore, your offer on a new home might be less attractive to sellers if it’s contingent on selling your existing property.
Strategies to Overcome Obstacles
There are several strategies to mitigate these challenges:
- Use HomeLight’s Buy Before You Sell Program: This option provides a streamlined solution to access your home’s equity before selling.
- Get a Bridge Loan: A bridge loan can be used to provide short-term financing that bridges the gap between purchasing a new home and selling your old one.
- Make a Contingent Offer: This involves making an offer on a new home contingent on your current home’s sale.
- Tap into Your Retirement Savings: For some, retirement savings can be a viable option to finance a new purchase.
Weighing Your Options
Deciding whether to buy a new home before selling your old one is a complex decision that depends on your financial situation, market conditions, and personal circumstances. By understanding the benefits and challenges and exploring various strategies, you can make an informed decision that is in line with your real estate goals and financial well-being. Remember, in the world of real estate, timing and strategy are everything. You can successfully bridge the gap to your dream home with the right approach.