Back HomeMoving Up In House
September 30th, 2013 by keithandkinsey
If you have been thinking about moving up in home, now is a great time. Homes are moving, so you should be able to sell your current home fairly quickly. Interest rates are still low, and prices are still lower than the previous market peak. This combination still makes for great home affordability.
Moving up in home may mean you have to sell your current home before you buy the next one; and make the finances all work in some way. So, how do you go about making the stars align to do this? There are 3 basic ways to do this (and lots of variations).
The Double Closing: This is the method many people prefer. This essentially means that you close on the sale of your current home, your loan gets paid off at closing, and then you immediately close on the sale of your new home with a new mortgage. We’ve done several of these deals in the past year, and it is a very fast convenient way to make your move without the risk having two mortgages, and get everything done at once.
There are some down sides to a double closing however. You would most likely be asking the seller to accept your offer contingent on the sale of your current house. There is potential risk with this, as you may get bumped by another offer on the home you want. Or you could wait until you get an accepted offer on your home and then rush to find your next home. Typically neither of these options leaves people getting the best deal or making the wisest decisions.
Sell First, Then Buy: You could sell your home first and rent for a while or stay with friends or family. This allows you to shop for your new home at your own pace, wait for the right house to come on the market, and jump on it. Your offer at this point could be stronger than another buyers’, because you are in the position to act quickly, and you have no home sale contingency. This method can be a pain in the butt, because you do have to move twice. However, this allows you a lot of flexibility, choices, and time to make an appropriate decision.
Buy First, Then Sell: This possibility is only available if you have the financial capabilities to pay cash or qualify for a new mortgage without paying off your old mortgage first. In the past people often did bridge loans in this situation, but as lending tightened up this option has seemed to disappear.
If you are financially capable, this can be a great way to move. You can take your time, choosing the right property to buy, and you can take your time moving. Another benefit is that you can get your current home cleaned and staged and leave it that way when you put it on the market. You won’t have to deal with rushing to clean up those countertops and get out of your home with the kids and dog when somebody schedules a showing. This is the option we chose when we moved. However, be warned there is an added risk of owning and paying for two homes.
If you are debating moving up in house, feel free to discuss your options with us. We’ll offer you an objective opinion of your best approach as well as recommend some lenders who can help you determine what is best for your situation.
