Move up buyers, I am talking to you here! Not many of us can afford, or know, what kind of home will work perfectly for our family when we buy our first house, or even our second. So though the house you’re currently in might be perfect for you 5 years ago, it is no longer working for your family. So how do you move up? Or down? How do you get into your DREAM house when your money and buying power are wrapped up in the house you’re living in?
EASY! Well, maybe not super easy, but easy enough. You have options depending on a million factors. Let me, and my lender, help you figure them out. I will list the most common options below, and chances are one or two of these will work for you, and we can help you decide which is BEST for you.
Option #1: Buy your Dream house before you sell your current home.
If you are thinking this option won’t apply to you, you are probably correct. This option really only works if you have enough cash in your bank account for a down payment and closing costs, AND you can qualify for two mortgages at once (with one of those being your dream home mortgage). Also, if you already have a primary residence, you might not be able to finagle getting another primary residence loan…which usually have lower interest rates than investment loans. This is of course the option every wants, because it is the easiest. No pressure to find your dream home in a certain time frame, no worries about moving twice, and no worries about the buyer for your home not performing. But realistically, only a few lucky ones can swing this. You can then sell your home once you have moved into your new dream home.
Option #2: Pulling a home equity line out of your current home
This option is more likely to be possible for many of you, but still more difficult to qualify for option. If you don’t want to sell your current home first, you can put an equity line on your property BEFORE you go on the market, and that way you will have your down payment and closing costs funds available to you for if and when you find your dream home.
Option #3: Making a contingent offer on your dream home
This was an impossible thing in recent years, but it is more common, and more accepted now. What does a contingent offer actually mean? It means you make an offer on your dream home that is contingent upon the successful sale of your current home. In order to get your dream home owners to buy into doing this, you should have your house listed on the market, and even better, have your house under contract already. If you are worried about listing your home and selling, and not being able to find your dream home…we can discuss this situation. If your dream home is rare…then you could end up homeless in this scenario. If this is the case you may want to have your house 100% market ready, with an attractive list price chosen, staging and repairs completed, and paperwork signed so you can hit the market as soon as you snag your rare dream home and put it under contract. This may include some finagling with the sellers of your dream home to believe that you have done all of this work already…which is why you need an agent who is brilliant at this part ( like me!).
Option 4: Rent out your current house, and buy your dream home
The rental market has been skyrocketing. Terrible if you are a renter, not so terrible if you are a landlord. It is significantly less expensive in most cases to buy rather than rent. Why do people rent then? Lots of reasons. Should you become a landlord? This is a choice for you, but I can certainly help you make this decision. I don’t do property management, but I can help you find out what your home will rent for, what the fees associated with this will be, and what type of vacancy rates you can expect. I personally strongly believe in owning real estate as investments, as long as your are in an equity position that the rent you collect will cover your mortgage payment, all fees, and repairs. The negative to this option is you don’t get to use your equity towards your down payment and closing costs of your new home…unless you pull an equity line. If you do pull an equity line out of your house, make sure that the market rent will cover your first mortgage, fees, repairs, AND your equity line payment. My lender can help you go over these numbers as well, so ask!!
Option #5: Sell your current house and rent until you find your dream home
This is the safest overall option, but the least attractive. Who wants to move twice? And do you sign a lease at this rental? How do you get out of the lease when you find your dream home? What about a vacation rental that is fully furnished? That works in the summer time here when vacation rentals are easy to find and inexpensive to rent. But over the winter…close to impossible. Plus you have to pay for storage for all of your stuff…and this rental may be nowhere near where you actually want to live.
So, it can be done, it is done every day, and all you really need are experienced, caring professionals to walk you through it. Moving is on the list of THE MOST STRESSFUL life events…right up there with death and divorce. So don’t try to figure out all of the details and your options yourself. Call me, and I will walk you through it, step by step. Giving you all of the information, and all of your options, every step of the way. That way you can make an informed, RIGHT decision for yourself, and your family!