As you consider buying a new home, you may have several decisions to face. One of the most difficult ones to wrap your mind around is when to sell your current home. Most people rely on using the equity in their existing home to put towards the new one, but getting the timing down can be a headache. For this reason, think carefully about whether you really need to sell your home before you purchase a new one.
Living in Limbo
It typically takes between 9 and 12 months to complete a new home build from start to finish. When you sell your home, the new owners often want to move into the home as soon as possible. This can mean living your life in limbo until the new home is finished. You might be stuck living with family or trying to find a rental for just a few months. If you have kids, this can be a big upset to their lifestyle. Those who can wait to sell until after they move into the new home are able to save themselves a lot of stress.
You Might Have Enough for Two Homes
There’s certainly a perception that only the super-rich can afford to own two homes, but this isn’t necessarily the case. Buying a second home will require you to have a 20% down payment, but if you already have that cash saved, you might be able to handle paying two mortgages for about a year. Enter some figures into our mortgage calculator to estimate what your additional payment would be.
Doing this might mean depleting your savings or living on a tight budget for those months, but the peace of mind that comes from being able to stay in your home until the new one is finished may be worth the sacrifices. Once you sell your old home, you’ll be able to replenish your savings and loosen the purse strings.
You Can Borrow Money
Many people also borrow money to afford the purchase without selling their current home. Some options for this are an unsecured line of credit (ULOC), a home equity line of credit (HELOC), or a bridge loan. You may also have options that would allow you to refinance your current mortgage to include the price of the new home.
That could represent only a minor change in monthly payment, depending on how much you currently owe. Explore these options by talking with one of the builder’s preferred lenders. These lenders are familiar with the new build process, so they have the experience you need to balance your finances and housing situation.
Renting
If you’re worried more about a bad housing market preventing you from getting the most out of your old home than you are about the logistics of needing a place to live, consider the benefits of renting your old home after you move into the new one. You’ll still have to figure out the financing piece of the puzzle with a qualified lender, but this option allows you to continue to build equity in the old home while having someone else pay your mortgage. You can then sell when the market improves.
Though selling before buying a new home seems to be the typical way to do things, it’s far from the only possibility. Speak to the builder's preferred lender and they can help you take a good look at your finances to figure out the best solution for you.
If you're thinking about a new custom home build, Augusta Fine Homes would love to work with you. Stop by any of our show home locations today and speak to one of our representatives. They'll answer and questions you may have and can get you in contact with our preferred lenders to discuss finances.
