Should You Buy Before You Sell?
Should you buy a new home before you sell your current one? This is a pretty common question, but, unfortunately, it’s one that has no hard-and-fast answer. In general, it’s financially easier to buy a home after you’ve sold your last one. For one, you hopefully have ample proceeds from the sale that can go toward your down payment, hence lowering your new monthly mortgage payment substantially. You can also more easily secure a new mortgage loan once your old one has been paid off.
There is one big disadvantage, though. If you sell your home first, you may have to find a transitional property – somewhere to live while you find and purchase a new place. This is often difficult, especially if you don’t have family or close friends nearby.
Not sure if you should buy a new San Antonio home before or after your sale? Consider these questions:
- 1. Is it even possible? In order to buy a new home before you’ve sold your current one, you’ll need to secure a second mortgage loan. Lenders can be wary to do this, and typically, a smaller percentage of buyers can qualify. Don't fret, though! You can (and should) always speak to a lender about the possibilities of this option- there is no harm in asking!
- 2. Can you afford it? Taking on two mortgage payments isn’t for the faint of heart. Take a serious look at your finances. Will you be able to pay both your mortgage payments each month, while still affording your other household necessities (utilities, groceries, gas, etc.)?
- 3. How long can you take it? There’s no telling how long a home will take to sell, so while you might be able to handle dual mortgage payments for a few months, what if the San Antonio housing market collapses and you’re stuck doing it longer? Can your finances take it?
- 4. Do you have a place to stay during the transition? Say you were to sell your home first, before purchasing a new place. Where would you go? Your parents? A friend’s house? A hotel? Keep in mind it should be affordable and easily accessible to your work/school/etc.
- 5. What is the market like? Get a Realtor’s assessment of the current market. What sort of inventory is out there? Is it a buyer’s market or a seller’s market? If there’s a lot of inventory and buyers have the power, your home may take a while to sell. Consequently, you may not want to get a new mortgage just yet (unless you’re absolutely sure you can afford it!)
The right timing is different for everyone. If you need help deciding whether to buy first, sell first or do both simultaneously, contact one of our agents. We’ll fill you in on the current market, and we’ll walk you through the best options for your household.