Are you in the position where you want to find a new home – but need a buyer for your current home? Fortunately there are a few options for people who are buying one home while selling another:
Buying using financing
If you need the equity in your current home to purchase another home, you will need financing to buy before you sell. Most people with a firm sale on their current home go for a short term bridge loan. Yes, it is a high-interest loan intended to help you fund your down payment and other costs that you will repay when your sale goes through.
Another option is a home equity loan, which creates a lien on your property. The bank has the right to repossess your home if you can't pay it back. Of course reducing the equity in your home whilst increasing your debt, won't look good on a mortgage application.
Selling with a delay
You have to have your timing right, but the best way to get approved for a mortgage is to have a buyer lined up for your house with a waiver to buy in place. Give yourself a longer possession period, your buyer is already ready to move and won't want to wait for you to find a new place. Buyers may agree to a relatively long closing period, maybe include in the contract, closing time can be reduced subject to agreement by buyer and seller.
Have a contingency plan
You may make the purchase of your new home subject to the sale of your own. This buyers clause is not always acceptable by a seller, especially if the seller has only just listed his property and is seeing a lot of action on it. You'll still be responsible for the deposit, but you'll get it back if the sale falls through. Unfortunately, this isn't a very great deal for the seller, they may be trying to manage the timing on a home purchase as well. With a “subject to the sale of the buyers home” you may have to show that your home is priced competitively to persuade the seller to accept your offer.
If you are going to need to make a home sale and a home purchase at the same time, we will need to go over your options with you.
Contact us today on 403-850-0669.