If you want to sell your current house and buy another one, you have to decide whether to start the purchase process before the sale process – or vice versa. Both routes have their pros and cons, but it seems as if selling first is the way to go. Here are some of the benefits you will enjoy when you decide to sell your current house first.
You Know How Much You Have To Work With
Most people who want to sell and buy a house at the same time want to use the proceeds from the first house to buy their next property. Unfortunately, if you want to do this but starts the purchase process before selling the first house, you can't know how much house you can afford because you don't know how much your current property will fetch. You can end up buying an expensive property that you can't afford to pay for if your current property sells for a low price. You can avoid this complication by selling first so that you know exactly how much you can spare for the purchase.
You Can Ignore the Sale Contingency
Many people who are buying and selling at the same time include a sale contingency in their purchase agreements. Such a contingency essentially tells the seller of your potential new home that you have agreed to buy their property, but only if you manage to sell your existing home. As you can suspect, property sellers aren't too enthusiastic with such contingencies. In fact, if there is a bidding war, you are likely to lose it due to such unpopular contingencies. Selling first allows you to purchase your next home without making it contingent on the sale of the first house.
It Makes Mortgage Qualification Easy
Lastly, selling before buying also has mortgage-related benefits; this is true if you haven't finished repaying the mortgage on the first house. If you start the purchase process before selling the first house, the outstanding part of the loan will ruin your income-to-debt ratio, making it difficult to qualify for a mortgage. Selling the first house frees up some of your existing debt obligations and makes your subsequent mortgage application more attractive to lenders. Don't forget that servicing two concurrent mortgages is also expensive; selling first will also relieve you from such a burden.
You can't afford to waste time you want to sell your house and buy another one. Get a real estate agent to help you get it over with as soon as possible.