4 Strategies to Buy a Home Before Selling Yours

As an experienced mortgage advisor, I know navigating the housing market can be stressful, especially with limited inventory and growing demand. Many homeowners face the dilemma of whether to buy a new home before selling their current one. This guide will explore four practical strategies to help you buy your next home without the stress of being temporarily homeless.

1. Making You a Cash Buyer

In a competitive market, cash is king. What if you don't have the cash on hand to buy outright? We've recently rolled out our Power Buyer Program, transforming financed buyers into cash buyers! This will make your offer more attractive and will set you apart from other buyers. This program eliminates common hurdles like mortgage contingencies and prolonged closing times.

Pros:

• Competitive Edge: Cash offers are always more appealing to sellers.
• Simplified Process: Avoids the complications of traditional financing.
• Faster Transactions: You could potentially secure your new home in just 14 days!

Cons:

• Power Buyer Fee: A fee applies for using the funds, and interest accrues until closing on your long-term financing.

2. Home Equity Line of Credit (HELOC)

A Home Equity Line of Credit (HELOC) can leverage the equity in your existing home to finance the purchase of your new home. To qualify, you'll need solid and stable income, sufficient equity, and a credit score above 680. A HELOC can offer up to 90-95% CLTV, depending on the investor, and are tied to the prime rate plus a margin.

Pros:

• Affordable and Simple: Depending on your circumstances, it can often be cost-effective to obtain and easy to qualify for.
• Access to Cash: Can provide you substantial funds for your new home purchase.
• Interest-only Payments: Keeps monthly payments manageable.

Cons:

• Processing Time: Can take some time to secure.
• Qualification Impact: Might affect your ability to qualify for a new mortgage.

3. Bridge Loans

A bridge loan serves as a temporary financial solution, allowing you to use the equity in your current home to purchase a new one. With our preferred bridge loan option, you can borrow up to 75% of your home’s value and skip immediate payments, as long as you sell your home within seven months.

Pros:

• Substantial Funds: Provides access to significant funds for your new home.
• No Immediate Payments: Making it easier to qualify for a new mortgage.
• Quick Process: Get your funds in as little as 14 days.

Cons:

• Costs: There are fees of around 2.3-2.4% of the loan amount.
• Equity Requirement: Requires a 25% equity cushion after the loan.

4. Renting Out Your Current Home

If you're in a position to do so, renting out your current home can be a wise financial decision. Keeping your home as a rental property offers steady income and multiple protections against inflation. Plus, future rental income can help you qualify for a new mortgage.

Pros:

• Retain Low-Rate Mortgage: Keeps your existing low-rate mortgage benefits.
• Inflation Protection: Rental income and property values generally rise with inflation.
• Additional Income Stream: Generates extra rental income.

Cons:

• Landlord Responsibilities: Managing tenants and property upkeep can be demanding.
• Financial Risk: Vacancies might impact your finances.
• Qualification Challenges: Future rental income might not fully offset your current mortgage payment.

Deciding to buy a new home before selling your current one is a strategic move based on your unique financial situation and goals. Whether you opt for the Power Buyer Program, a HELOC, a bridge loan, or renting out your current home, each option comes with its own set of benefits and considerations. Carefully assess your needs to choose the best approach for a seamless transition to your new home.

Ready to explore your options for buying a new home before selling your current one? Contact me today to discuss the best strategy for your financial situation and goals.