If you currently own a home, buying another home is more complicated. Here are several strategies you can take to transition to a new home.
The first strategy is the simplest. Shop around and purchase a new home that best meets your needs. Move-in and then sell your current home. This approach allows you to get the best out of your home purchase and home sale, but you must be financially able to have two properties for a period of time.
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Sell your home, move in to temporary housing or move-in with family. When you find your ideal home, buy it and then move-in. This approach has the same financial benefits of the previous approach, but it is the most inconvenient since it requires a double-move.
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With this approach you agree to purchase a home from a seller, but only if you are able to sell your existing home. In addition to the terms of the purchase - price, settlement date, etc. - you'll specify the maximum asking price for your home and how much time you have to sell it. This approach would appear to combine the best of the previous approaches and eliminate a double-move and the possibility of having two mortgages. But there are significant challenges with this strategy.
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If you can afford to buy without selling but want to minimize or eliminate a double mortgage, go ahead and get your home ready to sell. Find your new home and negotiate a non-contingent offer with a longer settlement date – say 45 to 60 days. Immediately put your home on the market and price it aggressively. Negotiate settlement terms that allow you to close on the sale of your home, buy and then move reducing or eliminating having two mortgages and avoiding a double-move. Since you’ll need to buy without selling, be prepared to carry two mortgages ‘just in case’.
A twist on a home sale contingency is to get a contract on your home then negotiate a purchase that’s only contingent upon closing on your sale. These are much easier to negotiate with sellers than a home sale contingency. With this approach, you must be prepared for a double-move if you find a buyer for your home, but haven't yet finalized the purchase of a new home.