Don't end up homeless or make these costly mistakes when you're upgrading to a larger home! Selling your home and moving into a larger home can be an exciting time but also a little scary if you do not have the proper guidance. There are certain issues to consider such as financing, how to make the move a smooth transition from one house to the other and how to save the most money in the process. I have created this article to help you learn some of the important steps you can take to make your move up easy, how to avoid costly mistakes and be able to make informed decisions throughout the entire process.
Avoid Having Two Mortgages:
One of the most common fears about moving up into a larger home is the fear that you may end up having two mortgages that must be paid. This is a possibility however here are a few helpful steps you can take to avoid the problem.
List your home for sale prior to looking for your new home. - This will give you a head start on the sale of your home.
List the sale of your current home as a contingency on any purchase contracts you write prior to it being sold. - This will help protect you from you home not selling before you are supposed to close on your new home.
Close the sale of your current home prior to making an offer on a larger home. - This is the safest option but not always the most convenient.
Timing Is The Key:
When moving from one home to another timing is crucial. Without having everything come together all at once you will either end up homeless or with two mortgage payments. A good idea to help with your timing is have an option such as temporary housing available to you. You can also rent back the home you are selling or early occupy the home you are purchasing if it is vacant. Keep your options open and your move up can be a smooth one.
Pre-Qualification Made Easy:
When you are looking to get pre-qualified make sure to let the lender know that you will be selling or renting your current home. The lender can then speculate what amount you will qualify for without the monthly burden of your existing mortgage. If you decide to sell you current home it is a good idea to have a market analysis completed on it along with a sellers net sheet. This will show the amount you should net from the sale. The lender can then use this information to help you qualify for a larger purchase amount.
Should You Rent Or Sell:
In most cases people moving up will sell their current home and use the proceeds to enable their purchase. In an appreciating market however renting your current home may not be a bad financial decision. If you need access to your equity you can always consider a home equity line of credit. Make sure that you can afford both payments in the event that a renter may vacate or not pay rent on time.
What About New Construction?:
Most new home builders are flexible to move up buyers and will accept your offer with a contingency. They understand that it takes 6 months or so to build a new home and chances are you will have your home sold before they can complete your new home. Selling your home and renting back from the new buyers works well in this situation. Also, you can look for temporary housing for any time gap that may occur.
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