Bridge Loans, Contingencies & Timing: What You Must Know to Buy & Sell

If you are planning to sell your current home and buy a new one, there are 4 different Strategies that you can use to make the process a smooth one:

 

Strategy #1: BUY 1st, Sell 2nd

    This is a great option for families with pets, kids, or those with sensitive health needs. It allows you to move fully into the new home and empty out the old home before you sell. Here’s How:

         A) Bridge Loan: This is a loan that lasts 6-12 months and covers the purchase of the new home under the condition that the old home is sold within 6-12 months and the loan repaid.

        B) Home Equity Loan: Some Homeowners have enough home equity in their current house that they can get a home equity loan for enough cash to buy the new house. Then, they sell the old one and pay off the loan.

 

Strategy #2: SIMULTANEOUS Buy/Sell

         This is a great option for those who like to get it all done at once.

         Option A) Make and offer on a new home, Contingent upon you selling your current home within 30-60 days. 

 

This type of offer is commonly accepted – particularly on homes that have been on the market for a few weeks. They don’t fare well in bidding wars because they are more complicated than cash or loan purchases.

 

          Option B) List your current home before you look for a new home. 

    

This situation is best in the summer when there are many homes to choose from. It can put the sellers in limbo if the old home sells before the new home is ready.

 

Strategy #3: SELL Now, Wait to Buy

            We see this most often with people who want to “Sell High” and wait “for the market to go down” before they buy. 

 

This situation has the most risk – especially in this market, because if prices increase again between the time you sell and the time you buy the next home, you may not actually be able to afford that new home.