Moving Up: Selling and Buying a Home Simultaneously

What if I told you that selling your current home and buying your dream home at the same time doesn’t have to be a stressful juggling act? It’s all about strategy, timing, and the right support.

When a homeowner wants to purchase a new home before selling their current one, there are several loan options available to make this possible. The best option depends on their financial situation, equity in the current home, and goals. Below are common strategies:

1. Bridge Loan

A bridge loan is a short-term loan that allows homeowners to use the equity in their current home as a down payment for the new home. Here's how it works: The lender provides a loan secured by your current home to cover the down payment or purchase of the new one.

Pros: You can transition quickly and make a strong offer on your dream home.
Cons: Higher interest rates and fees, plus the risk if your current home takes longer than expected to sell.

2. Home Equity Line of Credit (HELOC)

Next up is a Home Equity Line of Credit, or HELOC. This option lets you borrow against the equity in your current home to fund the purchase of a new home. Here's how it works: A line of credit is secured against your home, and you can draw funds as needed.

Pros: Flexible borrowing and repayment options, plus lower interest rates than bridge loans. Cons: You need sufficient equity in your home, and the HELOC must be repaid when you sell.

3. Cash-Out Refinance

A cash-out refinance allows you to access your home’s equity by refinancing your mortgage for a larger amount and receiving the difference in cash.

Pros: You may get lower interest rates than a bridge loan and convert your equity into liquid cash.
Cons: It extends or increases your mortgage and can take longer to process compared to a HELOC.

4. Contingent Offer

A contingent offer is when you make an offer on a new home, but it’s dependent on selling your current one first.

Pros: No need for additional loans, and it’s less risky financially.
Cons: It weakens your offer in competitive markets and requires seller cooperation.

5. Hard Money Loan

A hard money loan is an unsecured personal loan that covers the down payment or purchase cost without using your current home as collateral.

Pros: Quick funding with no risk to your current home.
Cons: Higher interest rates and limited borrowing amounts.

6. Temporary Rental Option

Finally, you can sell your current home first and rent temporarily while searching for a new home.

Pros: No need for additional loans, and it removes the financial strain of carrying two properties. Cons: It requires moving twice and may create pressure to find a new home quickly.

Things to Consider

Before deciding, here are a few things to consider: Evaluate your credit score, debt-to-income ratio, and market conditions. Each option has costs and risks, so it’s essential to consult with a lender or financial advisor. And of course, aligning with a skilled real estate professional ensures a seamless and strategic approach.

Tips for Success

Here are a few quick tips: Declutter and stage your current home to sell quickly, stay flexible with your timing, and always keep open communication with your agent and lender. Taking these steps will help you navigate the process with confidence.

Selling and buying a home simultaneously can feel overwhelming, but with the right strategy and guidance, it’s absolutely achievable. If you’re ready to start your move-up journey, I’d love to help. Reach out anytime, and let’s make your dream home a reality.