Here’s how you can buy another home without first selling your current one.
One of the most common questions we’ve received lately is, “How can I buy a house without selling the one I have now first?” With inventory being as low as it is, homeowners are concerned about not being able to find a new home if they sell their current home. Luckily, there are a couple of different options for those who find themselves in this situation.
Your first option, if you have the requisite down payment funds already, is to speak with your mortgage lender to see if you qualify for both homes at the same time. If you do qualify, sometimes they can take the current home you own and assume that you’re going to rent it out in order to reduce your monthly obligations. Keep in mind, though, that there will be a period where you own both homes at the exact same time.
If you don’t have the down payment funds available to buy the new home, you could look at a cash-out refinance, which would allow you to take out some of the equity you have in your current home to be used as a down payment on the new home. Alternatively, you could look into getting a 401(k) loan or a home equity line of credit to pull out some cash for your down payment. As with the first option, you will need to qualify for both homes at once to take advantage of these options.
Your third option is also set up through a financial institution: a bridge loan. A bridge loan allows you to use your equity to guarantee another loan for the next house even as you still own your current house. Under the terms of a bridge loan, you’re usually given six months to sell your existing house before the loan is due. Bridge loans work well in situations where you’re buying a house that needs work, as they give you a period of time to improve the property before you move in. These kinds of loans are beneficial, but they’re also more costly than traditional mortgages.
Other clients of ours have been very fortunate to be able to borrow money from family as a gift, but not everyone has those resources. These options will give you more certainty during that process that you won’t have to move twice.
If you have any questions about these options or you’d like more information about your own situation, feel free to reach out to me. I’d love to have a conversation with you.