Selling your house before buying a new home; it may sound simple at first but, if not properly planned, it can be a logistical nightmare.
There are so many variables when selling and buying a home at the same time. That means you’ll need to prepare for every scenario beforehand. But there are three fundamental actions you can take to prepare yourself so the process goes smoother and you’re less likely to get overwhelmed.
1. Add an addendum
If you’re like many people, you’re planning to buy a new home after selling the one you’re in. That way, you have cash on hand for your down payment. But where will you live after selling your home? Knowing how the real estate market is these days, searching for a new home the traditional way could take months. And living with your friends or family isn’t always ideal. Your best option is to add an addendum to your purchase agreement to rent from the person you just sold it to, but that would require the buyer to be open to that.
2. Use your home’s equity
Think of home equity as the difference between how much you owe on your mortgage and the market value of your home. For example, if you put 20 percent down to buy a $500,000 home, but you still owe $400,000, you’d have $100,000 in equity. Your equity will also increase with every mortgage payment you make and when your home’s value goes up. Turning your equity into cash is vital to buying a new one as it can be applied toward your down payment as well as increase your homebuying budget.
3. Secure financing
Start by securing your financing as early as possible. This starts with getting pre-underwritten. Many lenders will provide a pre-approval letter, but this isn’t a thorough process and leaves you open to surprises as it’s not legally binding. There are other lenders like Flyhomes Mortgage that can actually pre-underwrite you. That means they’ve already looked over all your finances so you know exactly how much your budget should be. And Flyhomes actually backs your offer with guaranteed funds and can help you close in as few as 10 days.
Or, you can buy first, sell later
Eliminate all the logistical challenges and apply your equity before selling with Buy Before You Sell. This Flyhomes service allows you to apply the proceeds from selling your current house toward the purchase of your new home—before actually selling. That means a bigger homebuying budget backed by guaranteed funds that closes in as few as 10 days. And because you can buy first, you only have to move once. They also back your purchase with a 1-year guarantee that says if you don’t love your home, they’ll clean, stage, photograph, market, list, and sell it for free. Interested in learning more? Read their guarantee.