How do you buy a home before you sell your current house? Here’s one good idea.
How can you buy a home before selling your current house? If you’re blessed, you won’t have to sell before you buy, and you’ll qualify for both mortgages. Many out there are blessed this way, but there are many more who are not—so what can they do?
If you’re in a position where you must buy before you sell, try opening a home equity line of credit (HELOC), aka a bridge loan.
HELOCs allow you to pull the current equity you have in your property and apply it to the down payment and closing costs of the new home you want to purchase.
They’re called bridge loans because they’re meant to help bridge the two separate buying and selling transactions. A bridge loan is a shorter-term note with a higher interest rate. In fact, it is interest-only, meaning it allows you more flexibility in a hot market like ours where homes are flying off the shelves. It also allows you to write an offer without a contingency, which is a boon to a homebuyer in a seller’s market.
You could also borrow money from family and use it as gift money toward the down payment on the new home. Regardless of the tactic you choose, be sure to discuss your options with your lender first. They can help you gauge how each will impact your monthly payments moving forward, which is ultimately going to determine how comfortable you are with the purchase.
If you have any questions about HELOCs, navigating dual transactions, or real estate in general, feel free to reach out to us. We’d love to help you.