Is it a Good Idea to Sell your Home before you buy Another?
When making the decision to buy a new home, you will need to make a few
decisions if you already own a home, including whether to wait until
your existing home sells before buying a new home, buy a new home first
or make the new home purchase contingent upon the sale of your existing
home. In today's market, many financial advisors and mortgage counselors
are recommending selling your existing home prior to buying a new home.
When you purchase a new home without first selling your existing home,
you could find yourself juggling two mortgages. That can often be
difficult to manage, particularly if you have other financial
obligations and/or a family.
One of the most important advantages of selling your existing home
before you actually buy a new home is that you will have a much better
idea of how much you can realistically afford to spend on your next home
purchase. Understanding your budget in advance will help to reduce the
risk of spending more for your new home than you can afford. This will
help to increase your confidence while shopping because you will know
precisely what price level is right for you.
Also, you will not have to worry about how long you will have to carry
two mortgage notes while you wait for your existing property to sell.
While at one time you might could reasonably expect a property to sell
in under six months, that is no longer the case. Depending on your
market, it could conceivably take longer and that is time in which you
will have to worry about the upkeep for two homes as well as two
mortgage payments each month. The simplest solution is to sell your
existing home first and then buy another home to save yourself the
headache, worry and hassle.
In addition, if you are able to supply the mortgage company or lender
with updated information that reflects your current financial standing
once you have actually sold your home it will be much easier for you to
pre-qualify for a home loan. Pre-qualifying means that your mortgage
provider or lender will provide you with a predetermined amount of
mortgage loan that is available to you based on your financial standing
at that point.
Furthermore, the process of searching for a new home that fits your
needs can be simplified and sped up. When you are not certain about your
budget it can be hard to shop around for a home. Once you have already
sold your home you will know exactly how much you can afford to spend on
your next home and that can help to narrow down the search.
There is also the fact that you will have more negotiating power with
the buyer if you have already sold your existing home. You will not feel
pressured to accept the first offer that comes along or lower terms if
you are not focused on the fact that you have to pay a second mortgage
Many people also find that when they sell their existing home first they
are able to obtain a higher selling price. The simple fact is that if
the buyer knows you are not to desperate to close the sale, he or she
will be more willing to pay your asking price if they are truly
interested in your home. On the other hand, if you are in a rush to sell
because you have already purchased another home, that gives the buyers
an incentive to ask for large discounts or other concessions. In most
cases, desperate sellers are forced to accept a lower selling price
because they are anxious to rid themselves of an extra mortgage payment
While there can sometimes be a concern regarding what you will do in the
interim if you sell your home before purchasing another home, this
problem can often be handled by simply renting a home after your
existing property sells and prior to buying your next property. Keep in
mind that once your property has sold it is a good idea to set up a
special bank account to hold the proceeds of the sale until you are
ready to purchase your next hoe. That will help you to avoid the
temptation to dip into the funds from the sale and ensure you have the
cash on hand you need when you do find your next dream home.