How to Sell Your Home and Buy A New Central Pa Home
When you bought that small 940 square foot starter home 6 years ago, you thought you had died and gone to heaven. A Central PA home of your own, no more landlords and, if you want to paint an accent wall in the dining room, you can.
But that was 6 years ago. Things are a little different now, not the least of which is little Jessica. She’s three now and you’d like for her to have her own room. That’s not going to happen in 940 square feet. So it’s time to go house- hunting.
You look and look at affordable Mechanicsburg homes for sale and find lots of nice homes that would be perfect for you. But how are you going to pull this off? You have to sell your house and buy a new one at the same time! WOW! Do you sell your home and then look for another one? What do you do in the meantime? And if you buy a new house before you sell the old one, where’s the down payment going to come from? It’s all tied-up in the equity in your existing home. What to do?
Of course there’s no guarantee that you can sell your old home and buy a new one, and have them both close at the same time. Are you ready for that dance? Well, it can be done and we’ll take a look at the three different scenarios that will get you in your dream home:
1. Sell old first-then buy new. This is the best plan of all, but it has its downside. In this case, you go ahead and sell your existing home before you ever buy a new one. You’ll sell your home and put your belongings in storage until you purchase a new home and live in a rental property temporarily. This approach gives you the best leverage when you buy because you’ll be a ready and able buyer. You won’t have a time crunch and forced to take a price you don’t like because of timing. You can also make the sale of your home contingent on finding a home to buy.
When you sell your old home first, you know precisely how much is available to spend for the new home. And you don’t have to be concerned about temporary financing. Whew! Another advantage for this scenario is that since you don’t have a commitment to a new home, you won’t be tempted to take a lower price on the old home. The whole disadvantage of buying before you sell is that, chances are, you’ll be moving a couple of times in a short period of time, which could wind up being longer than you had hoped.
2. Buy new first-then sell old. This approach can minimize the moving hassle. You can move into your new home whenever it suites you and then get your old home ready to sell whenever it fits your schedule. The only problem with this approach is that you will have two mortgage payments until your older home sells. Can you handle that? You’ll also have to keep the older home secure and maintained, i.e. utilities, taxes, etc. The best application for this scenario is when the older home is debt-free.
Another way to go with this scenario is to rent out the older home for a year, which buys you some time. Just remember that for that year, you will be a landlord and will have to assume all of those responsibilities. And once the lease is over, you may have to repair or renovate before you can sell.
3. Buy and sell at the same time. This is a tough one to pull off and you have to be prepared to go to the dance. You have to be sure that all of your ducks are in a row and that if you miscalculate, you may wind up in either of the above scenarios. The tricky part is timing all of the financing. The first option is a bridge loan. By doing this you can own two homes at the same time. To do this you’ll have to borrow from family or get a loan from a bank, which will cover you for the period between when you close on the new home and then when you close the old home. This basically means a Home Equity Line of Credit on the old home to pay the down payment on the new home. Then, you just repay the loan when you sell the old home. Got it? It’s not easy to get these bridge loans because you have to show that you can afford to pay all payments while you wait to sell. And who knows how long that might be.
The pros will tell you to apply for the Home Equity Line well before you buy the new home because you won’t actually be using the credit until you really need it. Banks don’t like these equity lines if they are for short periods of time. And it’s hard to get them to cooperate if your home is already on the market. Also, be sure to set the closing date on the old home to be after you close on the new home. That way, you can simply move when you close.
Who’s to say which is the best way to go? It all depends on your circumstances and how much risk you are willing to assume. Are you trying to move up to an affordable Mechanicsburg home for sale? The time is right because home prices and financing rates are historically low. So call Dan Zito, Zito Realty Group at 717-224-5827, or view Mechanicsburg Pa new homes for sale and he’ll go through all of the possible scenarios with you. We want to be sure you take the approach that is best for you. If you do it right, you may get that dream home after all.