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Buy a House or Sell the Current One First

  • Homeowners, who decide that they are ready to move up into a new house, often face a dilemma: Should they sell their current home or buy another first? You’ll find many agents saying different opinions. The answer depends on several factors, especially on market condition at the moment and your personal motivation. For things to go smoothly, you generally need to have a strategy and a bit of luck.

    Determine market conditions

    When and whether to sell first then buy or vice versa is the eternal question and it can depend on whether it is a buyer’s market or a seller’s market. In a buyer’s market, it’s better to sell first. The last thing you want is to be paying interest costs on two loans, or seeing equity in your properties eaten up, because you can’t sell your own home. In a seller’s market the best option is buying first. Purchasing before you sell may be the only way to ensure you don’t miss out on that special property. Also before making the final decision you should consider other factors, like market conditions in you particular area, the style of your home, the price range for your property. Also it’s a good idea to do some preview shopping to get an idea about the house you want and how easy it is to find it. 

    Financial situation

    For many people buying a new home for cash is a dream, so if you are in the same situation you’ll need the equity from the sale of your current home for the down payment for the next house. Also you may sell your home and try to negotiate to rent it back from your buyers. Lenders are also always limit the rent-back term to a maximum of 60 days, a rental lasting longer is considered as an investment property.

    If you need more time, which is likely in today’s market, you might need to move out your old home and temporary live with your parents or friends. If you’re forced to go this route, remember you’ll have to pay movers twice and put your stuff into storage, all of which can cost a pretty penny.

    A drawback to selling your home firsts is that you can find yourself under time pressure to buy a property that does not meet your needs.

    There is an option to qualify for the mortgage loan on both your current home and the next home. In any case, you should have your loan pre-approved. This will make the process easier and make you even more attractive to a seller.

    There are drawbacks to both selling and buying first but the decision is very much based on your view of the market. People in the industry say the tradition has been historically has been to sell your home and then start shopping for the new one. But in today’s housing market, when multiple offers are the norm, the process reversed and people starting buying, knowing their home would sell with ease. Before making the final decision, you’ll have to ask yourself many questions, the answer which variant is the best for you will depend on your finances, your local market conditions and many other factors.

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