Q: I found a home that is for sale by owner. It would be perfect for me. I currently own a home that I would like to sell. My house needs some work done to it in order to get the best price and to sell it quickly.
The seller of the home I want will not accept a contract that includes a contingency for the sale of my current residence. Unfortunately, all of my money is tied up in my current home. I have no savings, and cannot afford a 2nd mortgage.
How do you buy another home when you need to sell your home first?
I’m worried about putting my house up for sale because I’m afraid that I will not find another home I want instead. I have been looking for 4 years now and haven’t found a home in my price range that I would want better than the home I already have — until now.
A: You should never be afraid to sell a property. If you like your neighborhood, you can always rent until you find the right house to buy. (I’ve done a “double move” like that and it worked out well).
If you like the new house, and want to make an offer, you have a couple of choices when it comes to the financing: You can either take out a home equity loan on your current property to use as the down payment on the new home, or you can get a bridge loan to cover the purchase until your current residence is sold.
Another option is to use an interest-only loan to purchase the new property until your existing home is sold. Then, you can refinance the loan or contribute equity payments each month so that you start to build up additional equity in the property.
Talk to a couple of local mortgage lenders about your situation. It’s not uncommon and they will have good solutions for you. For information on loan types and interest rates, visit BankRate.com.
In the meantime, you better get busy fixing up your property. That way, when the time comes to sell, you’ll be ready.