Here are tips and advice that you can use when making this tough call. After checking out the advantages and disadvantages of each option.
Buying a House First: Why It’s Better
When you buy a house before selling your current one, you will own two properties. This option is great for those who can afford to pay two mortgages. Some other advantages of buying first are:
- No Need for Rushed Home Purchases: You can take as long as you want to find your dream home. Since you still own your current property, you have a place to stay, and you will not need to rent a temporary home.
- You’ll Only Need to Relocate One Time: If you sold your house first, you may have to move out while it’s on the market. If you already have a new home, you can move there before the old one is sold.
- More Control of Your Timeline: Since you won’t be in a rush to sell your current property, you’ll have more time to organize, pack, and move your possessions.
Some Disadvantages to Consider
However, if you’re considering buying a new home before selling your current one, we recommend that you take note of these drawbacks:
- Having to Pay Two Mortgages: While some can afford this, paying two mortgages is financially unsustainable for many people.
- Rushed Home Sales: The added pressure of a second mortgage might prompt you to sell the old property quickly. You may have to disregard market conditions and other volatile factors that affect the price of the property.
Handy Tips When Buying First
There are a few ways you can make the most of this option. You can try:
- Leasing the Old Property:Make your home productive by renting it out and getting additional income. This way, you can wait for the market conditions to be right before selling it.
- Getting a Bridge Loan or HELOC: Both a home equity line of credit (HELOC) and a bridge loan can help you get the funds you need to buy your new home.
Selling a House First: The Advantages
For most people, selling a property first is the most logical and practical option. Once the home is sold, you can secure the funding or equity for your next house. Some other reasons you should consider selling your property first are:
- The Luxury of Time: Since there’s no need for rushed home sales, you’ll have more control over who you sell your house to and how much you sell it. You can wait for higher offers for a higher profit margin.
- You’re Only Paying One Mortgage: Paying for two mortgages can be a financial strain, especially if you don’t have the resources to sustain it. Paying only for the mortgage of your current property is more manageable.
- You’ll Know the Profit: You wouldn’t want to shop for a property above your budget. When you sell your old property first, you’ll get an idea of how much you can spend for your next home.
- You Can Stage Your Property Yourself:Since there’s no rush to sell, you can stage your home on your own while your belongings are still inside.
Drawbacks to Think About
Selling a property first may be the most ideal option for some, but we would like to point out some disadvantages to consider:
- The Need for Temporary Housing: Since you’re selling your house, you’ll need temporary housing while it’s staged. However, if your family is smaller or if you’re a sole property owner, you can consider living with friends or family in the meantime.
- Rushed Home Purchase: Since you won’t have a home, you might feel pressure to buy the first option available rather than waiting for the right home for you.
- Moving Twice Doubles the Expenses: If you sold your home first, you’d need to move first to temporary housing, then again to your new home. Moving is a hassle and can be expensive.
Useful Tips When Selling First
- A Lease-Back Is Your Friend: You can ask the future owner of your current property to rent it to you for a month or two. You won’t have to relocate while finding a new home with this option.
- Take Advantage of Online Offers: Using online listings instead of selling through agents gives property owners more control of the selling process. You can even get cash offers with some buyers this way.