How To Purchase a New Home Before Your Current Property Sells

If you’ve suddenly found the home of your dreams and you want to make a competitive offer before other buyers, you’ve got to act fast. In some cases, this may mean purchasing your new home before your current property sells. While this isn’t the ideal financial situation, it is not unusual for a potential home buyer to face this problem. The good news is that there are many options for buyers in this predicament, such as using a hard money lender California or considering different types of loans. Here is how you can buy your new home before selling your current one.

Make a Contingent Offer

One of the most common ways to solve this issue is to make an offer on your dream home that’s contingent on your current home’s sale. Some sellers are not willing to accept contingent offers, so it’s important to understand the current market conditions and only go this route if it’s a buyer’s market.

Get a Bridge Loan

Another way to give yourself more purchasing power so you can handle the two mortgages for the new home and the old property is with a bridge loan. A residential bridge loan is designed for this real estate problem that many potential buyers may encounter.

Use Your Current Property’s Equity

Next, an issue that comes along with buying your new home before finalizing the sale of your current property is the lack of a down payment. One way to get access to some money for a down payment before your property sells is to consider refinancing and cashing in your current home’s equity. This could help you get closer to securing a new home. 

Consider an Investment Property  

It’s also worth looking into using your current home as a new investment property and renting it out. If your current property is located in an area with lucrative rent prices, it may make financial sense to hold onto your home and keep it as an investment. 

Work With Your Debt-to-Income Ratio

Juggling two mortgages is a potential nightmare situation for some borrowers. Banks want to avoid this worst-case scenario and may be hesitant to approve a borrower who hasn’t sold the current property. One way to get around this is to look for loan programs, such as a private money lender California, that have more generous debt-to-income ratios. This way, you can secure a new mortgage before selling your old home. 

Cash Out Your Retirement 

A final possible solution to getting into a new home before selling the old property is to increase your cash potential by tapping into your retirement account. In some situations, it may be a viable way to help bridge the gap in your finances before your older property sells. If you expect a long wait before the current home sells, this option may make sense.

When you’re stuck between the new home you’ve always wanted and your older property that hasn’t sold yet, it can seem like an impossible situation. Luckily, there are many different creative solutions that get you into a new home before selling the old one.