Buying A Home Before Selling Your Own
REM #F698
By Ilyce R. Glink
Summary: Many people face the same question: Should I buy a home first, or sell my current home first? A reader has purchased a new home and is currently trying to sell their present home. Ilyce explains different financing options for bridging the two loans.
Q: We have signed a sales contract to purchase a house at the end of next month.
Our current home is up for sale.
What happens if our home doesn't sell before we buy the next one? I understand we will have two mortgage payments, but is there a program out there that can help create a bridge between two loans?
A: Yes, there is a short-term loan program known as a "bridge loan"
that can help you cover extra cost you'll have of covering your new mortgage
before you've sold your existing home.
You may also be able to use a home equity line of credit on your existing property
to accomplish the same thing. Essentially you'd borrow against your equity to
get the cash for the down payment on the new home.
Please talk to several mortgage lenders about these options and how much they
will cost each month. Bridge loans can be much more expensive than home equity
loans or lines of credit. They are typically a short term solution to help you
during the transition when you haven’t yet sold your current home but
have purchased a new home.
Once you close on the new home, do what you can to sell your old home as quickly
as possible. Juggling the expenses of two homes at the same time can cause home
buyers to panic. If you do get an offer on your existing home that’s “in
the ballpark,” try to make a deal and close as soon as possible. Some
homeowners get hung up on getting their “price” on the sale and
forget that for each month they hold on to their old home, the money they pay
for the old home is lost money.
NOTE: This column is distributed by Real Estate Matters Syndicate, PO Box 366, Glencoe, Illinois, 60022. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher.
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