Buy Your Next House Before You Sell
It’s not uncommon for homeowners to want to buy their next home, before they sell their existing one. The tricky part is that many people need to sell their current home to get the equity out of it and use it as the down payment on the next house. In this blog, I want to share with you how you can make this desire a reality. What better than to move into your next home before selling your existing home!
1. Talk To a Lender
The first option is to talk with a lender. You may be surprised to find out that you can actually purchase the next home without a need to sell the original one and really that's the ultimate luxury. Sometimes a lender can refinance your current house and you can even use those funds for your down payment. So reach out to a smart lender, who can help you figure out your mortgage options.
2. Bridge Loan
Where homeowners have trouble buying their next house first is that they need to unlock their home equity. The traditional method for that is using a product called a bridge loan. Bridge loans allow you to use the equity on your current home towards the down payment for the next one. Compass has a great program called Compass Bridge Loans. Compass will even front your bridge loan payments for up to six months. Our team can make an introduction to help you explore that option if this sounds like a good fit for you.
3. Homeward
Homeward based here in Texas, will buy your next home for you, with their cash and you can move in right away. Once you've moved into the new home, we then list and sell your original home. Once you've sold your previous home, you buy back your new house from homeward. The fees for this is small, 1.9%. And you will pay a small rent to homeward until you buy the home back from them. The great news is that you don’t pay any fees until you’ve sold your original home - so you’re not making two payments at once. One interesting aspect of Homeward, is that they're a cash buyer so their all-cash offer will be more attractive to Sellers. Our team is a certified Homeward partner and can help you decide if this option may be right for you.
4. Knock Mortgage
Knock is a creative lender that also enables you to buy your next home before selling. Knock will finance the purchase your next house and will pay your current mortgage for up to six months. With Knock, you will own two homes at once, but only have one mortgage payment. Knock accomplishes this by giving you a second loan on your current home - so you need to have a nice amount of equity in it. This is a very similar option to Homeward with a couple of tweaks. It's also a great option to consider when you want to buy before you sell. Our team is a Knock Certified Agent and can help you decide if this option will work for your your situation.
5. New Construction
Another option is new construction. When you buy a brand new house, it’s not ready right away. You will sign a contract now for a house that won’t be ready for many months. (and you don’t have to start paying for it until then either!) All of the months under construction mean that you have plenty of time to plan your move and coordinate a sale that matches the timeline.
The good news is you have options! You’re not stuck in your current home and we can help you move into your dream home sooner than you think. Reach out, and we can have a strategy session to determine what is best for you.