SWITCHING HOMES: BUY A NEW ONE OR SELL THE OLD ONE FIRST?
With these market conditions of low prices and super-low interest rates, many people are thinking it’s the right time for them to upgrade their home or buy their dream home. And they are right. The problem is – most people need to sell their current home to buy the next one. The logistics of the “house swap” can be daunting if not thought out properly. It is important that you sit down with your REALTOR® and explore all the options available. Here are some of these options:
- Buy first, sell later.
Advantages: You can take advantage of current buying opportunities and low interest rates. Disadvantages: You will have to qualify for both loans, and if you do, you may have to pay two mortgages until your old home sells (you may also explore the availability of a “bridge” loan from your lender to help you make the transition).
- Sell first, buy later.
Advantages: This is the “safest” option, you only have one mortgage at a time, you have no uncertainties.
Disadvantages: You may have to sell in a Buyers’ market and not make as much from the sale as you were hoping for. And it may take a while to sell your current home so you may miss out on spot ("opportunistic”) bargains and maybe miss out on the lowest interest rates.
- Buy first, conditional upon the sale of your existing home.
Advantages: This poses little risk to you, if you don’t sell , you can get out of the purchase contract and get your earnest money back.
Disadvantages: Many sellers may be reluctant to accept such a contingency, given that it takes their home off the market for an uncertain period of time, with no guarantee of a sale. If they accept this condition, they will probably demand the home be listed with a professional agent, priced right, and may also give you a deadline to sell your home. It may be very frustrating if you really like the new home but you cannot sell your current home on time.
- If you are over 62, planning to downsize and have lots of equity, use a Reverse Mortgage for Purchase.
Advantages: You may get up to 50% of the appraised value of your home to buy your new, smaller home and have NO mortgage payments.
Disadvantages: The reverse mortgage amount may not be enough to purchase your new home.
At The Alan Donald Real Estate Team we are well known for our creative solutions to our clients’ challenges. Call us today at 843-416-1434 for a no-obligation, one-on-one consultation about your specific situation.
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