Buying your first home is a rollercoaster – exciting, overwhelming, intimidating, and rewarding. Despite all this, one study found that the average homeowner only stays in their home for about nine years. There’s lots of advice out there for first-time homebuyers, but what should you expect if it’s your second go round?
Decide if you’re going to buy or sell first.
There’s no “right” answer for this; determining whether you should sell your current home before you buy a new one is ultimately dependent on your financial situation.
Unless you’re really lucky, the sale of your current house probably won’t happen at the exact time you purchase a new one. Since many buyers’ financial situations are too tight to support being responsible for two monthly mortgage payments, they often add a “contingency offer” when buying their second home.
Contingency offers come in many shapes and forms, but for upgrading buyers, they usually mean that the financing and purchase of your second home is contingent upon the sale of your existing home. So if your current home doesn’t sell, then the purchase of your second home does not.
Adding a contingency to your offer is often a “safer” route; your realtor should be able to provide more insight as to whether you might want to consider adding one to your offer. In highly competitive markets – like Seattle or Portland – some buyers are waiving contingency, or not including that failsafe in their purchase offers.
However, if you aren’t confident you can pay two mortgages until your existing home sells, then you may want to consider selling your current home before you make any other offers.
Think about asking for a rent back.
If you have decided to sell your current home before purchasing a new one and need to stay in the area, then you could ask the buyer if they’d be open to a rent back. Rent backs allow the buyer to still close on the purchase, while you can stay in the home for an agreed-upon amount of time, paying rent to the new owner. Rent backs are especially attractive if the buyers are from out of town.
We’re here to help!
At Washington Federal, we know navigating the buying and selling process can be tricky. We’ve been specializing in helping people achieve their home ownership dreams for over 100 years. To find out more, contact one of our neighborhood branch managers or call us at 800-324-9375.