You’d think the process of buying and selling the second time around would be easier, but buying a new home when you already own one presents its own unique challenges.
The ‘tried and true’ advice is that you shouldn’t buy a new home before selling your current place – no one wants to pay two mortgages, right? However, this decision isn’t always as simple as it seems. Angie Kerr and Dakota Ruff, Buyer Specialists with The Waldhoff Gard Team at Keller Williams Realty along with Mark Waldhoff, suggest taking into account three factors when considering this choice.
What’s the Housing Market Like?
If it’s a buyers market, sell first. This can be a fit if the overall market demand is low and you are worried about your home sitting on the market longer than you’d like. Having your home sold will free you up to make a good decision with less stress on your home selling in an uncertain market.
If it’s a sellers market, buy first. Having a home to see in a sellers market is less of an issue. If you can feel confident that your home will sell at a good price and in a timely manner. With less available homes, it can take awhile to find the right property. If you aren’t rushed to move out of your current home, you will have more time to make the right decision on your new home.
“Buying first in a seller’s market allows you to take your time and find your next perfect home without a time crunch.” -Dakota
What Do Your Finances Look Like?
For most people, it isn’t financially feasible to carry two mortgages for very long. When deciding on buying or selling first, your immediate access to cash and your debt to income ratio should be top of mind.
If you have cash saved, buy first. If you can cover the down payment for your new home or even make an all cash offer this makes it easier to Buy First. Especially if you are in a Seller’s Market.
“The thought of carrying two mortgages is a scary prospect for most people. If your home-buying budget isn’t dependent on the sale of your current home you’re in a great position to buy your new home first.” -Mark
If you have a high debt-to-income ratio, sell first. Lenders use a guideline of 28% of your income when they determine how much you can put towards your mortgage/housing payment. Anything higher and you probably won’t qualify for a 2nd mortgage (or want the extra payment!).
What about other options? A good REALTOR and lender are key in this discussion as a variety of options exist: Bridge Loans, Home Equity Lines of Credit (HELOCs), cash-out refinance (if you have a lot of equity in your current home), and even sale-leaseback arrangements that let you stay in your current home for a set amount of time.
What Works for You and Your Family?
Keeping a home ‘show-ready’ when you have kids running around, a busy work schedule or just a busy life is a challenge! Condition and appearance are key in selling your home for top dollar and quickly. If this will be a struggle for you, Angie’s advice is to consider buying first. You can move in, declutter the old place, deep-clean and it will show and sell much better.
Do you have friends or family nearby that can accommodate house guests for the timeframe between your moves? If so, consider selling first. This requires an extra move in the process but relieves the financial stress of having two mortgage payments. It can also be a fun time when you know you will only be living with family/friends/in-laws for a few weeks before you move into your new home!
“When you have an active family, with multiple schedules and school and work commutes to consider, moving twice is often more trouble than it’s worth.” -Angie
Whatever decision makes the most sense for you, timing is key. And no matter which route you take, The Waldhoff Gard Team’s experienced brokers are here to help.
If you are ready to make the right move, contact us today!