Buy Your Next Home
If you are in the market for your next home, you may find yourself facing a dilemma – sell first and then buy, or buy first and then sell?
If you choose to sell your current home first, you'll be under pressure to find another house quickly and may end up settling for less than you wanted, overpaying, or renting a storage unit for all of your possessions until you find another place.
However, if you buy first, you might have to scramble to sell your old house, which can be a problem if you need to get top dollar in order to make the down payment on a new home.
While this can be a stressful, rest assured that investing in real estate can be a great way to build wealth. When you’re considering purchasing that second home, here are just a few tips to take into consideration before you go house shopping.
Make a checklist: You’re moving for a reason. Maybe you want a bigger house, better location, or easy access to freeways. Whatever your reasons, write them all down with special attention to “must haves” and “wishes.”
On your list, include the monthly amount you’re able to afford. To figure out your monthly payment, you can use this handy calculator. This will help you determine the price range that you’re comfortable with and allow you to zero in on the homes that will work best.
Know the housing market: Investigating housing prices in the areas you are selling and buying is critical in order for you to plan your next move. Before putting your house on the market or committing to buying a new one, research prices of houses in both areas so you have a realistic idea of comparable houses. This will lead you in the right direction both on what price to list your current home, and how much to pay for your next one.
Another way to learn about the current market is to see if the market is "hot" (favors sellers) or "cold" (favors buyers). Since you're both a buyer and a seller, you'll need to protect yourself in your weaker role while making the most of your stronger role.
In a hot market, it will be easier to sell your home than it will to buy a new one. To make sure you don’t end up without a home, you may want to start by looking for a house to buy, then line up enough cash to tide you over during the hopefully short period where you own two houses at once.
When the market is cold, you're in a stronger position as a buyer than as a seller. This means there will be many houses for sale at reasonable prices. However, you may have trouble selling yours. To protect yourself, you might start by buying a second house, but ask the seller to make your purchase contingent upon your selling your current home. A seller having a hard time finding a buyer is likely to accept this contingency, even though it means waiting for you to find a buyer.
If you cannot negotiate a deal with a seller, and you find yourself in limbo, you may have to own two houses at once.
Owning two houses: Should you be stuck owning both house at once, talk to Rivermark to see if we can offer you a bridge loan. This loan is where we lend you money to “bridge” the period between when you close on your new house and when you get your money from the sale of your old one. Essentially, you’ll take out a short-term loan on your existing house, using it toward the down payment and closing costs on your new house, and repaying it when your first house sells.
Financing your home: Once you’re ready to get started, Rivermark has many mortgage options to choose from. We also have experts who can help you decide on the right one for you, should you want some extra help. Just give us a call at 800.452.8502 or 503.626.6600. It’s a great idea to get pre-approved so you know exactly what your budget can handle before you shop for your next home.
Buying your next home can be an exciting time. Taking the time to cover all your bases before you sign the paper will ensure that it won’t become a hassle.