Buying your new home while selling your old home can seem daunting if not impossible. It is difficult to feel in control with so many factors at play. But there are really only three scenarios:
- You sell your old home before you buy your new home;
- You buy your new home and sell your old simultaneously (same day closings);
- You buy your new home before you sell your old home.
Few people choose to sell their old home before purchasing the next for fear of homelessness. Moving your belongings into storage and finding temporary living accommodations is not for everyone. But it does reduce the amount of variables and can give some home buyers peace of mind, knowing one-half of the processes is already behind them.
Buying and selling might seem difficult if not impossible but it happens all the time. In fact it happens most of the time. The key is working with a good realtor who can represent you on both your sale and purchase. Using the same title company on both sides of the transaction is helpful but not necessary. Typically, you would close on the old house in the morning, bring the proceeds from the sale to your second closing as either a cashier’s check or having the title company send a wire to your purchase closing in the afternoon. This happens all the time.
There is a third option– buying the new home first and selling old one later. If you are dependent on proceeds from your old home for the down payment, this option may not be for you. But if you 5% down and can income qualify, this third option is worth considering. If you are asking yourself, “why put down 5% now, if I can put 20% after I sell and avoid MI?” it’s only because you haven’t heard of recasting.
Recasting is an option available from select lenders which allows for a second down payment on a purchase. That is an initial down payment at closing and a second down payment any time after closing.
Marcus Downs – Mortgage Loan Officer – NMLS 321363 – 612.867.0719 – firstname.lastname@example.org