When transitioning from one home to another, many find the pressure an inevitable part of the process. Whether they are looking for a place to spend their retirement days, upgrading, or changing their living space for a new job, homeowners find themselves in a two-step process of selling and buying.
As the statistics published by the National Association of Realtors show, 89% of homeowners either sold or were planning to sell their house in the last year. Knowing your financial limitations, understanding the way the market works, and having backup plans for possible bumps in the road are just a couple of things that might help you take the pressure off.
A realtor with CENTURY 21 Action plus Realty, Susan Staffordsmith, says that the job of realtors is to make sure that the client’s expenses are minimized. The majority of them are not willing to pay for storage or moving twice. These are the things that can increase the sum up to thousands.
Here are some specific things you should know.
Are Two Homes Too Much?
The majority of sellers want to know if it is possible to keep two houses in case they don’t sell the first one.
If you hope to get a mortgage for the new home and already have one on your first house, you must be capable of handling monthly payments for both of them. In case the debt is too big considering your monthly income, the mortgage lender won’t approve a loan for the second house.
As Pava Leyrer, chief operating officer of Northern Mortgage Services, says the lender won’t disregard the house just because it’s on the selling list.
If you do want to apply for a mortgage on the second house as well, you should ask yourself if the idea of double payment is something you’re comfortable with.
Leyrer says that in markets where houses are sold swiftly, people are more willing to hold up two homes because they are eager to get the home they really want.
What to Do If You Require Equity?
If you’re capable of handling both mortgages but need equity in the first house to purchase the second, there are two ways to do that.
First, you could get an equity loan or a credit from a bank and use it as a down payment. Second, you could reduce your monthly payment by putting down less than 20% and then later modifying your home loan. Of course, you should double-check this with the lender.
If you don’t see these options as something you could manage in your current situation, you should sell your house first.
Things to Do Before You Sell Your Home
If the thing standing between you and your new home is the old one, you should seriously prepare for selling. In order to make your house ready for sale, you should fix any problems you may find, revive the space with new paint, and declutter. If there is a possibility, you should also move out.
It is quite important not to overprice your property because it could make selling that much harder. It will make it stay on the market longer and possibly make people think there is something wrong with it.
Even if you get the price you intended, you will need to estimate if the buyer can get a mortgage for that price. If it turns out your price is not realistic, you will have to renegotiate it.
Don’t Make Your Offer Limited
Since nowadays home sellers have more power, as a home buyer, you should make sure the offer you put forward comes with a preapproved mortgage. Agents recommend selling your house first before you make an offer for the new one. This makes you a cash buyer and gives you a superior position.
You should be noted that, in hotter markets, the contingency of home sale makes your offer as a buyer less attractive, and you should prepare to give the right of first refusal to the seller. If another buyer appears, it’s best to remove your contingency or the seller can accept an offer of another buyer.
Work With One Realtor on Both Buying and Selling
If your home buying and home selling are to happen in the same area, it would be smart to work with the same agent on both transactions. This way, your realtor can have an informed discussion with a listing agent for the second home about what’s going on with the first one.
Have a Backup Plan
One of the greatest worries for someone transitioning from one home to another is bad timing, which can have serious consequences, such as having to maintain two homes or not having a place to live.
In case you end up with two homes, you should deposit a monthly mortgage payment one or two times. This extra money can be used for rental using sites such as VRBO or Airbnb in case you haven’t found a new home after selling the old one.
Also, you can make the agreement on post-sale occupancy with your buyer. This will help you remain in your home for a given period of time after the deal is closed.
In typical cases, a part of the sales fund is held as a security deposit for the new owner. These are the funds you receive when the rental period comes to an end and the new owner concludes that there is nothing damaged.