Rebecca Richardson - Mortgage Consultant
Buying a Home When You Have One to Sell
All right, so you're ready to buy a house, but you have a house to sell. So how does that work?
Well, in our market, when there is such limited inventory, most sellers don't want to take what's called a contingent offer. That means that the purchase of their house, your new house, is contingent upon the sale of your current one. What that tends to look like is understanding that maybe you're going to make a great profit off the sale of your home and you plan to put a large down payment. From a lending perspective, can we pre approve you owning both homes, realizing that that's probably not what your preference would be for cash flow, but also is that something that we can actually get you approved for? Also, are there other options or other funds that you can tap into for the downpayment, other than the equity of the sale? What that will allow you to do is to go in and put an offer on a home that then isn't contingent upon the sale of your home.
Understanding that because the market is moving so quickly, and homes are in high demand, a great realtor will put you in a good position to make sure that you go under contract quickly. That way, your ultimate plan, what you want from the standpoint of being able to use the equity on your sale goes into the purchase of your new home. We can change that as that happens. Meaning once your home goes under contract, if we need to reconfigure the loan, that is something that is easy to do.
The other thing to keep in mind is, its good just to have a contingency plan from the standpoint of you intend to sell. But what happens if that sale falls through? Is that something that you can float for a little bit because what it allows you to do is be more competitive in the market so you can win the house that you want? The other thing that people will pay attention to is the timing of that. How does that happen? Sometimes that looks like maybe you sell a couple of days before your purchase. Maybe you rent the house back from your buyers. But most times, what happens is what's called a simultaneous close. This means that you will sell say at 10 o'clock, and then you will buy at 11 o'clock. Those proceeds from your sale don't have to go through your bank account. They stay with the closing attorney, and they essentially just roll forward to your purchase.
In case you ever have questions about how to qualify when you have a house to sell, I know it can seem intimidating from a logistics standpoint, but realtors and lenders do this all the time. I'd love to talk with you to figure out how to get you what you want in a stress-free and easy way.