How to Buy and Sell a Home Simultaneously
You are in the housing market not only to buy a home but to also sell your current property. Do you buy first? Sell first? How does this work? Let’s look at your options and best ways to tackle this situation.
Bridge Loan – A bridge loan is a temporary loan designed specifically to get you through this exact situation flawlessly. This loan bridges the gap between your selling price of your home and your new mortgage and is secured to the buyer’s existing home. Rarely do the dates of buying a home and selling your home line up perfectly. A bridge loan gives you the financial wiggle room necessary when both buying and selling a home in the market. The bridge loan is used as the down payment on the new home and usually paid off with the sale of the current home.
Home Equity Loan – Equity is based on the difference between the value of your home and how much you owe on the mortgage. Home equity loans are generally used to make repairs on a home, pay off a high-interest debt, or for a large purchase. The loan will be received in one lump sum so it is important to use it for something important, such as a down payment on your next home. With this loan, you are ultimately leveraging your home so failure to repay could result in the loss of property. The benefit of using a home equity loan versus a bridge loan is that interest rates are typically lower allowing you to successfully complete both transactions spending less money.
Talk to an Expert – Which loan is right for you? The answer depends on a variety of details specific to you and your financial situation. Talk to a mortgage expert first before making a final decision. Make the transition from your old to your new home as seamless as possible with unique financing options.