CAUGHT IN BETWEEN SELLING AND BUYING A HOME?
Selling a home and buying a new one can be a difficult balancing act. Most
consumers are hesitant to buy a home until their existing home is sold. In an
ideal world, both transactions would occur simultaneously. However, homebuyers
and sellers often get “caught in between” real estate transactions.
With this in mind, we’d like to offer several tips on how to increase the likelihood of selling and buying at around the same time and what to do if a “caught in between” situation arises:
Consider bridge loans: Bridge loans enable buyers to move forward with the purchase of a home, while the current home remains on the market by borrowing from the existing home’s equity until the proceeds from its sale are obtained. Some bridge loans require only interest payments; others require a single payment of interest and principal when the loan is due back. Though some bridge loans can be extended, they can become expensive if protracted. Therefore it’s best to use them for overlaps of a few days between closings, or at the most, a few months.
Consider whether to buy or sell first: Homeowners should determine whether it is in their best interest to buy or sell first since most need to sell their current home in order to qualify for a loan to buy their next home, which is usually more expensive.
Buy on contingency: An ideal way to prevent getting “caught in between” real estate transactions is to have a prior-sale contingency included in the purchase contract for the new home. It provides the opportunity to withdraw an offer if the existing home does not sell by a certain date.
Coordinate a lease from the buyer: The sale of a current home is often finalized before the purchase transaction for the new home is completed. One way to bridge this gap is to lease the current home from the new buyer until the purchased property is available. An attorney should draw up a contract or lease agreement. Coordinating a lease is effective because it alleviates financial concerns and removes the hassle of having to go to a temporary residence before moving into a new home.
Look into renting: The buyer may not always be able or willing to lease their newly purchased home, so renting a property is another option to consider. Although relocating twice in quick succession is not ideal, renting serves as a fix for the short term.
Review home equity options: If it is necessary to borrow for longer than a few months, the best option is to use home equity, particularly if a sizeable equity has been built up. Options include a fixed-rate home equity loan and a home equity line of credit.
For more information about buying or selling real estate, contact The Canarecci Group with Coldwell Banker Roth Werhly Graber. Tom & Katrina, A Team is Always Better!
IndianasBestHomes.com
With this in mind, we’d like to offer several tips on how to increase the likelihood of selling and buying at around the same time and what to do if a “caught in between” situation arises:
Consider bridge loans: Bridge loans enable buyers to move forward with the purchase of a home, while the current home remains on the market by borrowing from the existing home’s equity until the proceeds from its sale are obtained. Some bridge loans require only interest payments; others require a single payment of interest and principal when the loan is due back. Though some bridge loans can be extended, they can become expensive if protracted. Therefore it’s best to use them for overlaps of a few days between closings, or at the most, a few months.
Consider whether to buy or sell first: Homeowners should determine whether it is in their best interest to buy or sell first since most need to sell their current home in order to qualify for a loan to buy their next home, which is usually more expensive.
Buy on contingency: An ideal way to prevent getting “caught in between” real estate transactions is to have a prior-sale contingency included in the purchase contract for the new home. It provides the opportunity to withdraw an offer if the existing home does not sell by a certain date.
Coordinate a lease from the buyer: The sale of a current home is often finalized before the purchase transaction for the new home is completed. One way to bridge this gap is to lease the current home from the new buyer until the purchased property is available. An attorney should draw up a contract or lease agreement. Coordinating a lease is effective because it alleviates financial concerns and removes the hassle of having to go to a temporary residence before moving into a new home.
Look into renting: The buyer may not always be able or willing to lease their newly purchased home, so renting a property is another option to consider. Although relocating twice in quick succession is not ideal, renting serves as a fix for the short term.
Review home equity options: If it is necessary to borrow for longer than a few months, the best option is to use home equity, particularly if a sizeable equity has been built up. Options include a fixed-rate home equity loan and a home equity line of credit.
For more information about buying or selling real estate, contact The Canarecci Group with Coldwell Banker Roth Werhly Graber. Tom & Katrina, A Team is Always Better!
IndianasBestHomes.com
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