If you want to move on to your dream home, but you need to sell first, how do you do it? What happens if you have to sell your home in order to buy a home? Many people find themselves in this situation because they need the proceeds of their home sale to fund the purchase of their next home. This holds sellers back because they don’t know how to move forward. Let’s look at five options that will help you “juggle the double” of selling and buying a home!
- Home equity line of credit – depending on how much equity you have in your home, you may be able to use a home equity line of credit to purchase your next home outright, especially if downsizing. If you qualify to purchase a home without selling yours first, or you need a deposit for a retirement community or new build, you could use your line of credit for the down payment or deposit. Chances are you have a lot of “cash” tied up in your current home.
- Bridge/swing loan or “buy now, sell later” programs. Many banks offer some sort of bridge or swing loan. With this loan, the bank covers your current mortgage while pre-approving you for the mortgage on your new home. Once you purchase your new home, you then sell your old home. The bank covers, or bridges, these two loans until your old home sells. There are also “buy now, sell later” programs that are similar in that you can buy your new home first and sell your old home afterwards.
- Rent back situation – in some situations you may have your new home set up and just need a few weeks to close on your home, take your proceeds to purchase your new home, and get moved out. This is often the case with a new home build or moving to a retirement community. You can close on your home and get the proceeds for your home, then rent back from the new owners for a short period, allowing you to purchase and move to your next home.
- Find temporary housing – this may work if you have friends or family with extra space, or are able to find a short term rental. This often requires putting some things in storage, but it can give you the breathing room between selling your current home and finding a new home. This is a good option if you want time to look or can’t use one of the financing options mentioned earlier.
- Utilize a “motivated” seller – if a home has been on the market for a while, the seller may be willing to work with you. You would be writing an offer contingent on the sale and settlement of your home. Once you go under agreement with the seller, you would list your home for sale. There is usually a time period that you have to sell your home before the seller has a right to terminate the contract. This is a great option if you can find a motivated seller to work with!
There are many options to help you get into your dream home – even when you have to sell your home in order to buy. Let’s chat and get you into your perfect home!
