Author: Jay Hurst, Co-Founder of Hurst Lending
The decision to buy a new home before selling your current property can be a daunting one. It’s important to weigh the pros and cons of each option carefully and consider factors such as the current real estate market, your financial situation, and your personal preferences. In this article, we’ll explore the advantages and disadvantages of buying before selling, and provide some insights to help you make an informed decision. As the co-founder of Hurst Lending, I’ve helped many clients navigate this decision, and I hope that this article will help you as well.
For more details on our Buy Before You Sell program please visit us at: https://hurstlending.com/dominate-loans/buy-before-you-sell/.
Advantages of buying before selling
Avoiding the stress of a rushed sale:
One of the biggest advantages of buying a new home before selling your current property is that it allows you to avoid the stress of a rushed sale. If you sell your current property first, you may feel pressure to accept a lower offer or make concessions just to close the deal quickly. Buying a new home before selling gives you more time to find the perfect property without the pressure of a deadline. For example, if you’re relocating for work and need to find a new home quickly, buying before selling may be the best option to ensure that you have a place to move into right away.
Having a place to move into immediately:
Another advantage of buying before selling is that it gives you a place to move into immediately. If you sell your current property before finding a new one, you may need to find temporary housing while you search for a new property. This can be especially challenging if you have a family and you want to minimize disruption to your daily routine. Buying a new home before selling ensures that you have a place to move into right away, which can help reduce stress and uncertainty during the transition.
Taking advantage of favorable interest rates and home prices:
If you’re buying in a competitive market, buying before selling can help you take advantage of favorable interest rates and home prices. This can help you save money in the long run, especially if you plan to stay in your new home for several years. For example, if interest rates are low and home prices are rising in your area, buying before selling can help you lock in a lower mortgage rate and a lower home price.
Disadvantages of buying before selling
Carrying two mortgages: One of the biggest risks of buying a new home before selling your current property is the possibility of carrying two mortgages. If you buy a new home before selling your current property and it takes longer than expected to sell, you may end up paying two mortgages for an extended period. This can be a financial burden that can limit your ability to save for other financial goals or cause you to fall behind on other bills. For example, if you’re moving to a more expensive home than your current one, the monthly mortgage payments may be higher, which can be challenging to manage if you’re also paying the mortgage on your old property. As an expert buy-before-you-sell lender we can help minimize this risk by providing you a short term bridge loan that defers you new loan payments for a couple months while you try to sell your old property.
Being stuck with two properties:
Another risk of buying before selling is the possibility of being stuck with two properties. If you’re unable to sell your current property or you’re only able to sell it for less than what you owe, you may end up being responsible for two mortgages and two sets of property taxes and maintenance costs. If you don’t have equity in your old home, we may steer you away from this loan program (since we want to help minimize your risk associated with not being able to sell you departing residence). For example, if you are in a buyers market, it can be challenging to accurately predict how long it will take to sell your current property or how much you’ll be able to sell it for. We will work with you to understand this risk and will encourage you have some cushion to be able to reduce the sale price on your departing home if it does not sell quickly. Ultimately, it is your decision to set the sale price your old home, in conjunction with your Realtor, but we are another resource you can call on to provide another opinion.
Factors to consider:
When deciding whether to buy a new home before selling your current property, there are several factors to consider. These include:
Your financial situation:
Before buying a new home, it’s important to carefully consider your financial situation. Can you afford to carry two mortgages if it takes longer than expected to sell your current property? Will you be able to make the monthly mortgage payments on both properties without putting yourself in financial jeopardy? These are important questions to ask yourself before making a decision.
The current real estate market:
The current state of the real estate market can have a significant impact on whether it’s better to buy before selling or sell before buying. If it’s a seller’s market where homes are selling quickly and prices are high, it may be better to buy before selling to take advantage of these favorable conditions. However, if it’s a buyer’s market where inventory is high and prices are low, it may be better to sell before buying to take advantage of the lower prices.
Your personal preferences:
Your personal preferences should also play a role in your decision. Do you have a specific type of property in mind that you’re looking for, or are you open to a variety of options? Are you willing to take on the risks associated with buying before selling, or do you prefer the security of knowing that your current property has been sold before purchasing a new one?
Conclusion:
Ultimately, the decision to buy a new home before selling your current property depends on your individual circumstances. While there are advantages and disadvantages to each option, it’s important to carefully consider your financial situation, the current state of the real estate market, and your personal preferences before making a decision. It’s also important to consult with an expert buy-before-you-sell lender, like Hurst Lending, who can help you navigate the complex financial aspects of buying before you sell.
At Hurst Lending, we understand that buying before selling your departing residence can be a bit scary, but we’re here to help. Our team of experienced mortgage advisors can help you explore your options and find the best solution for your unique situation. Whether you’re looking to buy before selling or sell before buying, we can provide the guidance and support you need to make an informed decision. Contact us today to learn more about how we can help you achieve your real estate goals.
For more details on our Buy Before You Sell program please visit us at: https://hurstlending.com/dominate-loans/buy-before-you-sell/.
REFERENCES
Investopedia. (2021). Should You Buy or Sell Your Home First? Retrieved from https://www.investopedia.com/should-you-buy-or-sell-your-home-first-4774652
Forbes. (2021). Buying Before Selling: A Homeowner’s Guide. Retrieved from https://www.forbes.com/advisor/mortgages/buying-before-selling/?sh=61f3a3ff1916
Zillow. (2021). Should You Buy or Sell First in 2021? Retrieved from https://www.zillow.com/mortgage-learning/buying-and-selling-at-the-same-time/
About Jay Hurst
In addition to being one of the founders of Hurst Lending, I am also a financial planner. I have been helping our customers buy, sell, and refinance their homes since 2006. Our personalized approach to the home buying process includes a suite of services that solve common hurdles in the home buying process. Have you ever experienced the frustration of Losing your dream home in a bidding war; Trying to buy before you sell; Had your buyer fallout; or Being on a fixed income and needing your equity to purchase a new home? Our Industry-leading suite of Dominate with a Cash Offer line of credit/short term loans solves these issues. We also offer a suite of real estate investor loan products and a full suite of conventional, VA, FHA, construction and traditional home loans.
Please feel free to contact me directly if I can help provide a loan for your next purchase or refinance, or even if you just want advice on how to get started or expand your real estate investing activities.
Jay Hurst
Co-Founder, Hurst Lending
jhurst@hurstlending.com
*Please note that this article is not intended to provide legal advice. You should contact your own attorney to understand the legal protections that are available to you when you purchase or refinance real estate.
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