There are various challenges to confront when selling a house. However, if the house in question is the one you’re currently living in, a major question you’ll need to answer is where will you go once the house is sold. In a perfect world, you’d be finalizing the sale of your home on the same day that you’re finalizing the purchase of a new house. However, this is almost never the case. You can either sell your house first or buy a new one first. Which approach is more advisable?
There Is a Risk of Paying Two Mortgages
For starters, it will be difficult to qualify for a mortgage on a new house while you’re still paying off your existing mortgage. Your debt-to-income ratio may rule you out for optimal interest rates. However, even if you do qualify for another mortgage, you’ll still be in the unenviable position of carrying two mortgages at the same time. This is one of the hazards of buying before selling.
Carrying two mortgages may not seem like an issue if it’s for a month or two; however, there’s no guarantee you’ll sell your old house that quickly. You may be making payments on two mortgages for a while.
A Competitive Market Favors Selling First
If you’re buying your new home in a competitive market, you are unlikely to succeed with an offer that’s contingent on the sale of your current home. Many buyers would prefer to make deals that are contingent on the sale of their current houses. This can help them avoid getting stuck with two mortgages.
Unfortunately, when there are multiple parties interested in a particular property, your offer may not make it past the screening process. Why would a seller wait for you to sell your current home when they have other buyers waiting in line?
Renting for a While Might Be Better
When you’re trying to handle both the sale of your current house and the purchase of a new home, mistakes could easily be made. One of the areas where you might make a mistake is in the buying of a new house. Selling a home poses a few challenges, but at the end of the day the most important thing is simply to get paid what the property is worth. On the other hand, when you’re buying, you’ll be choosing a place for your family to stay for years. Rushing to commit may not be the best approach.
In the end, selling your home first may be the best option. A dedicated real estate agent can help you streamline the process of both buying and selling in order to minimize the gap between selling your old home and finding the perfect place to land.
Founded in 1915, the Weidel family of companies has grown to encompass all parts of the residential and commercial real estate markets, including brokerage through Weidel Real Estate, real estate mortgages and finance through Princeton Mortgage, title insurance through Princeton Assurance Corporation, and real estate education and licensing through the Princeton School of Real Estate.