Last week, we discussed the reasons you should sell first, then buy a new home. That is optimal for most people. But there are situations in which buying a new home first, then selling your current home is the right thing to do.
If you have the cash on hand for a down payment and have the means to pay for two mortgages while selling your existing property, buying first offers several advantages.
No pressure to find your dream home
If you're under a deadline to move out of your existing home because the new owners are moving in, you're likely to compromise on what you're looking for in a new home. Buying first offers you the opportunity to look for a new home without any pressure to purchase. You're more likely to hold out for your dream home, rather than settling for one without some of the features you desire.
Wasting money on rental
Finding the right place to rent is almost as difficult as finding a new home. Property managers won't usually sign a month-to-month lease, and they don't like signing a short-term lease. And if they do, they charge more for the same property. So if you sign a six-month lease and find a new home immediately, you'll still be on the hook for whatever is required to break the lease.
You'll only have to move once
Let's face it... moving is a hassle. If you sell your home, and aren't able to find a new home, you either have to move into a rental or move your entire home into storage while you live with friends or relatives. In essence, you're moving twice - once when you move everything to the storage facility, and again when you find a new home.
Knowing the market is essential. Take a hard look at your budget and be realistic about your financial situation. Talk to your mortgage lender to make sure that you can qualify for a second mortgage on a new home. As always, talk to your REALTOR® to take the temperature of the housing market in your area.