Is it possible to buy another house before selling the one you are in?
In the ideal world, buyers both sell their homes and buy a new one – at the same time. The truth is the process is not that simple. You need to expect some time between selling and buying since the process is full of complicated steps. It is entirely possible to do both, but the real question is whether or not you are going to want to do it.
Consider what you gain and lose by selling before buying or buying before you sell.
Pros and Cons of Selling before Buying
Pros
- No risk of paying two mortgages at the same time.
- Cash is accessible for a down payment.
- Better understanding of equity
- No pressure to reduce the asking price
Cons
- Moving twice will be expensive and stressful
- Pressure to find a home might lead to an impulse purchase
- Temporary housing adds to the overall cost of moving
Pros and Cons of Buying before Selling
Pros
- Finding a home becomes enjoyable and relaxed
- Only one moving expense
- Less likely to rush or regret the new purchase
- Financial cushion available in case something goes wrong
Cons
- Might not be able to make a sizeable down payment on the new house
- Pressure to accept a lower offer if you’re rushing to sell
- Two sets of taxes to pay
- Might not qualify for a new mortgage if you’re carrying the old one
Steps to sell first
First, contact a real estate agent to list your home. Once you have a concrete offer, start looking for a new home. This can help the process be less stressful.
Decide where you want to live before beginning your new home search. Sometimes it takes weeks or months to find the perfect home. Make sure you have a place to live from the instant your sell your home until you move into your new one.
Steps to buy first
As soon as you list your current home, start searching for your new house. Being proactive will help avoid issues later on.
Make an offer and request an extended closing. This can help give you time to coordinate the sale of your old home.
Use your savings to help with the down payment of your new home. Alternatively, consider buying the new house with a home equity line of credit.
The process of buying and selling can have a significant impact on our finances and your mental health. It is stressful and can be financially prohibitive. If you are set on doing both at the same time, then you need to assess your circumstances carefully.
