Should You Sell Before You Buy Your New Home Purchase
This article covers Should You Sell Before You Buy Your New Home Purchase
Advice on whether you should sell before you buy your new home. This decision depends on the individual homeowner. Very few home buyers can afford to qualify for two mortgages at the same time. If you currently own a home and want to know whether you should sell your before you buy your new home, many homeowners contemplate the thought of whether ” should you sell before you buy”.
There are homeowners who can afford to buy first before they sell their current homes. Many home buyers will need the proceeds from the sale of their homes to purchase a new home. Yet most homeowners will not qualify for two mortgage loans at the same time due to debt to income ratios.
Advantages Of Selling Before Buying
One of the biggest advantages of selling before buying your new home is that it allows you to bring more funds to the table. Most homebuyers can afford to have the down payment for a new home before they sell their current home. Cash is king. If you place an offer on a new purchase offer with a larger down payment, it will give you better negotiation power. Also, a larger down payment on a home loan is considered compensating factor. Compensating Factors are positive factors above and beyond the minimum qualifying factors for the borrower.
Down Payment On Home Purchase
Larger down payments show the lender that you have more skin in the game and the mortgage loan is considered of less risk to the lender. If you cannot sell your home first before you buy, your purchase offer may need to contain a contingency clause that you need to sell your home first in order for the purchase transaction to go forward and close. A contingency clause of your home selling first shows extreme weakness to home sellers. The chances are that they will most likely not accept your purchase offer unless they are super desperate and the home has been on the market for quite a length of time.
Selling Before You Buy Your New Home: Pro # 2
Selling your home prior to buying will save you from having two mortgage payments. Selling a home is not like selling a car where it can be sold in a matter of days. Selling a home may take weeks or many months. Once your home is sold, it will take anywhere between 30 to 60 days if not longer to close on your home. If you buy before you sell your home, you will not only have two mortgage payments. But you will also need to have the stress of owning a vacant home. Insuring a vacant home can be quite costly and depending on the area where the home is, vandalism could be a major problem.
Having Less Pressure To Sell
If you are selling your home before you buy a home, you will have less pressure when it comes to selling. If you have a home under contract to buy and you are on a timeline to sell, the pressure is on that you need to sell your home. Whatever demand a potential home buyer to your home asks, you will have no choice but to cave in to those demands. However, if you are selling your home before buying a new home, that pressure is off and you can play hardball because you are under no time constraints. You can take your time and make counteroffers without the pressure to accept a lowball offer so you can meet the closing date of your new home purchase.
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