Strategic Tips for “Buy First Then Sell” Move-Up Buyers

How to Move Up to Your Next Home with Ease – Week 5

Welcome to the final installment of our 5-part series! Whether you’re a first-time mover or have done it before, this guide is your go-to resource for transitioning to your next home smoothly. This week, we’ll focus on move-up buyers aiming to purchase their new home before selling their current one.

Understanding Your Financing Options

Before diving into the house hunt, it’s crucial to meet with your lender to determine if you’re eligible to buy your new home first. If you’re unsure, refer to our previous article, Successful Strategies to Sell First Then Buy, for guidance on selling before buying. Additionally, ensure you’ve reviewed our first article, What Move-Up Buyers Need to First Ask Themselves, to define your criteria, budget, and preferred neighborhoods.

Let’s Get Started

Now, let’s delve into the process of buying before selling, without carrying two mortgages for too long or at all. Some of you might even consider retaining your current home as a rental property.

Determining Your Down Payment

Before proceeding, ensure your lender has provided written approval for buying a new home while still owning your current one. This approval hinges on factors like your debt-to-income ratio, typically capped at 45% of your income. Review the loan estimate with your lender and agent to make sure you understand the full costs for homes in your budget.

While you won’t know your exact equity until you sell your current home, there are various strategies to access the cash you need for a down payment:

• Consider a home equity line of credit (HELOC) or a cash-out refinance, though lenders may view this unfavorably.
• Alternatively, explore borrowing from your savings or retirement funds under the guidance of a financial advisor.
• Evaluate bridge loan options, though they can be costly and should be used as a last resort.
• Ask your lender for solutions, as some lenders have special programs that can help you bridge the gap financially until you sell your current home.

Developing Your Plan

With financing in place, it’s time to begin your home search within your budget and preferred neighborhoods. Wait to start house hunting until you’ve thoroughly discussed your financial strategy with your agent and lender.

One advantage of buying first is the flexibility to take your time finding your dream home. However, be mindful of the potential overlap of owning two homes and double mortgage payments.

Work closely with your agent to understand market dynamics, such as seasonal fluctuations, to optimize your selling timeline. Start preparing your current home for sale in advance to minimize delays once you find your new home.

Conclusion

Our series concludes with a reminder to plan well in advance, relying on your expert team of agents and lenders. Avoid starting your home search prematurely and understand that each move-up buyer’s journey is unique.

Reach out to me to discuss your specific situation and create a personalized plan for your move-up journey. I’m here to ensure your buying and selling experience is as seamless and profitable as possible.

Thank you for following this series, and best of luck with your move-up adventure!