You have found your dream home, but you need to sell it.It's nearly impossible to close on both houses on the same day or month, so you'll need to decide which to do first: sell your current home or buy your next home.The majority of people will need to sell first.Prepare for a place to stay as you wait to buy your new home by including relevant contingencies in your contracts.
Step 1: Do you qualify for a second mortgage?
If you want to get a mortgage on your new home, talk to your lender.You will be told by your lender if you can carry an additional mortgage.You won't be able to get two mortgages at the same time because of your finances.You have to sell your home before you buy one.It is up to you whether to sell your current home first or buy your second home.Discuss the markets with your real estate agent.
Step 2: You can hire a real estate agent.
Your agent will help you decide if you should sell in a hot or cold market.The market you plan to buy into can be analyzed by the agent.You can find a real estate agent by looking in your phone book or talking to someone who has recently bought a home.If you are buying into a different city, you may need a second agent.Someone with deep knowledge about market conditions is what you want.
Step 3: The markets can be analyzed.
You cannot develop a game plan until you understand the market you want to buy into.Do some independent research and talk to your agent.You can go onto websites such as Zillow.Look at how long houses have been on the market and how often the price had to be lowered before the property was sold.In a hot market, homes should not be on the market for more than 30 days.Even when the price is lowered, homes can stay unsold for months.
Step 4: The markets are hot.
When you buy into a hot market and sell into it at the same time, things can move quickly.You will be able to sell your home, but you will have to pay top dollar so you aren't homeless for a long time.
Step 5: Wait to buy when the markets are cold.
You will have your choice of homes when you buy into a cold market.You have the option of being picky and aggressive on price.Unless you are willing to accept a low price, it will be hard to sell your own home.You should wait to buy if you can't get a second mortgage.You can speed up the sale of your home by pricing it fairly.You don't want to ask for too much if you get an appraisal.
Step 6: Sell into a hot market and buy in a cold market.
The best situation is this one.You can quickly sell your current home if you have your pick of homes at competitive prices.You will probably only need temporary housing for a short period of time.
Step 7: If you want to buy into a hot market, be sure to sit tight.
It's the worst combination to have.Unless you can get a second mortgage, you are stuck with selling your current home first.Do you want to carry two mortgages for a long time?You might not be able to sell your home for a while.
Step 8: If you must sell your home first, negotiate a contingency.
You should include a contingency in your purchase and sale agreement if you are buying into a hot real estate market.If your current home sells, you won't be able to purchase a new one.You don't have to go through with the home purchase if the contingency is not met.You should know that a seller can turn you down.They don't need to wait for you to sell your home if the housing market is hot.They can ask you to remove your contingency or reject your offer entirely.If you buy into a cold market, this contingency can work.If you use the sale of your home as a contingency, it is possible to close on both properties on the same day, where the close of one loan's proceeds is directly used towards the payment of the new home.Both processes need to flow at the same time.It is best to have the home inspected and in good shape prior to making an offer with a property contingency because it can get tricky when the buyer is leaving backs out due to inspection issues.
Step 9: You must buy your home first if you want a contingency.
You may be afraid of being homeless if you sell before you buy.You can include a contingency that you must close on your next home before the sale of your current home.Many potential buyers might not approve of this.They are being asked to put their lives on hold until you find a home.If you are selling into a hot market, this contingency may work.Buyers might feel like they have no choice but to wait for you because of the limited housing supply.
Step 10: There is a rent-back provision.
If you are selling into a hot market, you may not be able to close on a new home before you sell your current one.There is a provision for a "rent-back" in this situation.You can stay in the house for 60-90 days and pay rent after you sell.The rent-back provision is decided by the lender.The property will be considered an investment property if it lasts longer than 90 days.The buyers will decide how much rent to charge you, and they will base it on either the mortgage payment or the local market rents.
Step 11: There is a contingency in your mortgage.
You aren't likely to qualify to carry two mortgages at the same time.Your lender will add a contingency to your mortgage if you don't.Once you close on the sale of your current home, you will get access to the loan funds.
Step 12: Prepare for a difficult experience.
Accept that this is a tiring process.It is worrisome enough to sell a home.You have built contingencies into your contracts because you may not be able to time everything just right.Exercise, eating well, and getting enough sleep are ways to handle stress.
Step 13: Take care of your real estate agent.
Many people want to save a little money by cutting out professionals in this do-it-yourself culture.Don't.Allow your real estate agent to stay on top of deadlines and paperwork requirements by meeting early and often.If you want to sell a home in a cold market or buy a hot one, make sure your agent is an experienced one.
Step 14: Look for temporary housing.
Most people have to sell their home first before they can buy another.Back-up housing can be used to relieve stress.Talk to your family and friends.Is there space where you can stay?Is it close to your job?It's possible you need two places to stay.One parent can rent an apartment close to work while the other parent moves in with family during the summer.Try to be flexible.Also look at storage options.You might not be able to take all of your things with you to the shelter.
Step 15: Prepare for being a landlord.
If you are able to buy your second home before selling your first, you should rent it out to make money.If you want to sell into a cold market, this might be the only option.If you want to know what you're getting into, talk to your landlords.Ask how they find good tenants and get a sample of their lease agreement.Also talk to a landlord-tenant attorney.You need expert legal advice if you are a landlord.
Step 16: Save money.
If you decide to carry two mortgages at the same time, you will need money to pay them.If you need to move into temporary shelter, you will have to pay for it.As quickly as possible, save as much money as you can.You should delay the home buying process until you have enough.
Step 17: If it's necessary, get a bridge loan.
Let's say you decide to buy.To make a down payment on your second home, you will need a loan.Make the loan official by asking your friends and family first.You might need to ask your lender for a bridge loan.It's hard to get a bridge loan.You have to convince your lender that you can carry two mortgages indefinitely.