Which comes first when you are planning to make a move – the sale of your current home or the purchase of your next home? This is a question that comes up often in working with families who are changing homes in the Franklin, TN area. I’ve helped several families make this transition this year so I’ll explain the options to try to help you make the best decision for your situation.
- Talk with your mortgage lender to see if you do need to sell in order to qualify to buy what you want to purchase. Is some cases, you may be able to buy without selling. Even if this is an option, you might not be comfortable with the idea of having two mortgages for any period of time.
- If you have some equity in your current home, you might be able to get a bank loan or bridge loan. This will allow you to move forward with the purchase and then put a typical mortgage on the new place once the prior home sells. The closing costs for this route are typically a little more in part because it involves two loans – the temporary bank loan and then the mortgage loan.
- Many people don’t have the options above. If you really need to sell in order to buy, the most flexible situation will require you to sell and move into a short term rental like an apartment. This might not be the preferred option because it requires you to move twice – to the rental and then to the new home. It may be the best option because you are seriously looking to buy when you have already sold your pervious home. You may have more negotiating power when you don’t have a home to sell and hopefully have the equity out of your prior home to use as a down payment.
- If you don’t want to move twice or it would be difficult to find or live in a rental, you can attempt to buy and sell at the same time. It is possible to coordinate closing dates and move directly from one residence to the other. It can be difficult to find the right new home for your family at the same time the right buyer wants to purchase your current home. You may lose the first home you want to buy while waiting for the buyer for your current place. You will need a Sale of Home contingency included in the contract. Typically the owners of the home you want to buy are more likely to accept an offer from someone who doesn’t have a Sale of Home contingency. If there is a competitive situation, you may lose out to a buyer who doesn’t need to sell in order to buy. Even if you do end up with an accepted contract on the home you want to purchase, the listing agent or seller will most likely ask for a kick out clause. This clause means that if they receive another acceptable offer, they can give you notice and require you to remove your sale of home contingency within a certain time period and move forward toward closing as agreed in the contract. If you cannot remove the contingency, the contract will be terminated and they will accept the other offer.
I know this is a lot to think about. I’m glad to help with your home sale and purchase. I can take care of the details and help make the transition smoother.