What’s The Best Way To Buy a Home Before Selling?

By Greg McCarthy

Greg McCarthy is a Broker and co-owner of The McCarthy Group at Keller Williams Realty Metropolitan in New Hampshire. Greg’s been a REALTOR in New Hampshire since 1999. He’s passionate about having helped over a thousand families with their home ownership needs throughout Southern New Hampshire.

How can you buy a home before selling your current one? You might have considered using a home sale contingency plan, but those are rare in today’s low inventory market. If you’re in a situation where you must buy first before selling, don’t worry; you still have options. Here are three things that will help you buy before you sell:

1. Use a home equity line of credit. A home equity line of credit, or HELOC, is a second mortgage that allows you to borrow cash based on the value of your home. In other words, it allows you to use your equity without selling your home. Another bonus of using HELOC is that you don’t have to make payments until you start to use the line of credit. Getting approved for a HELOC can take anywhere between 45 and 60 days to complete. That’s why you should get started on this process as soon as you can.

2. Use a third-party buying company. Companies like Homelite and Homeward are companies that offer you a certain amount based on your home’s equity and value. These companies can buy your new home with an all-cash offer, allowing you to move in. Then, once you sell your existing home, you buy back the new home using the proceeds from the sale. Buying a house with an all-cash offer is attractive to home sellers, especially in a hot market. However, consider the service fees and interest fees involved.

3. Finance with a bridge loan. A bridge loan is a short-term, high-interest loan using your equity as collateral to get a loan for your new house. Once you find your new home, you can apply for up to 80% of the combined value of both properties. They approve you faster than HELOCs, but with higher rates, and those with great credit and high equity. This option is convenient for those who qualify.

Buying a new home before selling your existing one has its unique challenges, but if you can leverage the three options above and utilize the guidance of an experienced agent, you can come up with the best solutions for your situation. If you want more details about this topic or have any real estate concerns, don’t hesitate to call me or email me at greg@themccarthygrp.com. I’ll be happy to help.