Amid the housing shortages during the pandemic, home buyers are scrambling to score a new property. House and land packages in sprawling neighborhoods are everywhere, but the real estate bid has got even more competitive. The dreadful property chain is causing chaos, tripping clients up to the last minute.
In a perfect world, homeowners sell their home the moment they release it on the market and use all the extra time to search for their next dream home. But just like other things in life, buying and selling properties isn’t that easy, especially for homeowners who want to buy and sell a house at the same time.
Unless you’re one of the rare homeowners who have the financial capacity to make two mortgage payments at once, buying a property before selling the current house isn’t an option. The truth is, there are plenty of choices when selling a house while buying another. The decision depends on your property, the type of market, budget, and your personal situation.
Selling a property before buying a new one
Most people prefer selling their current house before committing to a new housing investment. This allows them to secure the sale and have a better idea of how much they need to buy their dream home.
Having money in hand significantly eases the financial pressure of the situation. Paying off two mortgages or handling closing fees while managing two properties is no easy feat. Others prefer to sell their homes because of security as it frees up the budget for the new home and makes it easier to be eligible for a mortgage. Thus, selling the house before buying a new one is much simpler, straightforward, and cost-effective.
The biggest drawback to this method is it may leave you homeless if you end up not finding a replacement home immediately. After selling the house, you’ll likely stay in limbo while hunting for another. If you aren’t lucky to move to a new place, you end up living in your parent’s or friend’s house. The challenge is even greater if you have pets, plenty of belongings, or even a family to support. The last thing you want is to live in a home with less than ideal living conditions.
There’s also the idea of moving twice. The first one is the temporary housing, then to the new property. All these points to one thing — double the hassle and double the cost. If you haven’t settled in a new home but the buyer is already keen on moving in, chances are, the pressure could force you to buy a home you’re not ready for.
If you’ve decided to sell first, a great tip is to plan where you will live temporarily. This will allow you to have a place to stay in just in case you haven’t decided where to move. If you have a family, renting accommodation for a couple of months will ensure a convenient place for the family. Otherwise, you can live with your family or a close friend while looking for a new place. Whatever choice you pick, make sure to have a strong backup plan and monetary resources to make your living situation easier.
Buying a property before selling
There are plenty of benefits to buying a new home before selling the old one. First off, moving is much easier. You have plenty of time to sort things out from moving all your possessions to the new home anytime you like. No need to settle in temporary housing while waiting for the old property to sell.
This approach works out for those who are following a timeline. If you have to move to a new job or city on a specific date, buying a new house will secure your living arrangement before the deadline.
When it comes to the financial aspect, buying a property first requires bigger monetary resources. Keep in mind that you have to secure both your old and current mortgage payments. This also includes the down payment, moving expenses, closing cost, maintenance, and upkeep of the two properties. All these things are too much to handle, especially on a limited income.
If you’re planning to buy first, renting the old property will help you generate income to fund the new mortgage and maintenance of the new home until you found a potential buyer. You may also consider getting a bridge loan or equity loan to cover the expenses of the two properties. Another technique is to take advantage of the housing boom and list your house online. With so many house hunters right now, you have a bigger chance of closing a deal in no time.
The bottom line
In the end, there’s no right or answer when deciding to sell and buy a house at the same time. But it’s worth noting that the housing market can be quite unpredictable, so it’s important to be aware of how the current situation will affect your housing plans and financial decisions. If you’re feeling uncertain or overwhelmed, take time to evaluate the big picture and determine the costs and the strengths and weaknesses of each option.