Moving Up: How To Sell Your Home (or Rent It) and Buy Another One

Mortgage and Lending with First Heritage Mortgage NMLS #: 938761

Buying your first home probably seemed complicated and overwhelming, but transitioning from your first home to your second home can be lot more difficult without the proper guidance.

When you purchased your first home, you were renting a house or an apartment.  Even if you had a lease that had not yet expired, worst case scenario would be paying a couple of months’ rent in order to get out of the lease.  You didn’t have to worry about selling a house and the timing of that selling.

Also, there are a lot of great first-time home buyer programs offering incentives like 100% financing, lower down payments, and grant money.  When you are moving up to your second home, you will have to plan a little more to come up with down payment funds and coordinate all of the moving parts.

Talk with a Realtor

Start by talking to your Realtor about selling your house:  Will it be easy to sell?  How much is estimated you will net from the sale?  Is it recommended you list your home before you look for your next home or go under contract on your next home and then list your current home?  Will it be difficult to get the home you want if your offer is contingent on selling your current home?  Much will depend on your home and the market conditions in your area.

Talk with a Mortgage Lender

The answers from the questions above will help you develop a financing plan with your mortgage lender. You may want to see if you can qualify for both mortgage payments first.  This way, your offer on your next home will be more competitive as you won’t have to wait for your home to sell before you close.  You will need to be prepared, in the event your home doesn’t sell before you close on your next home, to pay both mortgage payments until it does sell.

If you are unable to qualify for both payments at the same time or you need to sell your first house in order to come up with down payment funds, your lender will issue a pre-approval letter that is contingent on you current home selling.  You will need to wait for this to happen before you can close on your second home.  You can do a same day closing as long as the closing of your current home occurs before the closing of your next home.

Converting Your Current Home into a Rental

Many of my clients are choosing to convert their current homes into rentals.  If you can qualify for both mortgage payments on your own, this is no problem.  However, if your debt to income ratios are too high to qualify, it becomes trickier.  You may be able to lower them by using future income from your rental unit to qualify if you meet the following requirements:

  1. An appraisal shows you have at least 30% equity in your current home that you plan on renting.
  2. You have an executed lease agreement.
  3. You provide proof that you received the security deposit from the tenant.
  4. You can show cash reserves (funds available after you close to be used in an emergency).

If you are ready to move on up, feel free to email or call me at 804.386.9364 for a mortgage loan consultation.

Originally published at Loan Officer Lately.

Comments (10)

Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

Thanks for the tips in moving up Whitney, there are things to learn at every step of the way.

Nov 09, 2014 09:37 PM
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Whitney, great post for both first time home buyers and those home owners thinking of renting their homes to start their real estate portfolio.  

Nov 10, 2014 10:23 PM
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Whitney this is great information for home owners who want to sell their home or rent their home while they buy another one. Thanks for sharing.

Nov 19, 2014 07:25 AM
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

Bravo Whitney! A well put together plan, anyone could follow it!

Nov 19, 2014 11:05 AM
Rebecca Gaujot, Realtor®
Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

Hi Whitney, excellent post and good information!

Nov 20, 2014 11:02 AM
Whitney Watson
First Heritage Mortgage - Henrico, VA

Tom- That's very true, every step is a learning process.

Joan- Thank you for your comment!

Lanre- Thank you for stopping by!

Evelyn-I try to keep it short and sweet :)

Rebecca- Thank you for stopping by!


Nov 20, 2014 10:44 PM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello again Whitney ... Vegas Bob would love to "Feature" your post to one of his groups, but once again the ActiveRain Network is (Broken).

And if you notice, you posted to 5 different groups and one of them shows up on at the bottom of you post. I guess only "The Gods" have the power to Feature so congrats to you, wonderful post

Nov 21, 2014 09:26 AM
Whitney Watson
First Heritage Mortgage - Henrico, VA

VB-Thank you for your comment and I appreciate the "feature!" Sorry to hear that you still aren't able to do so in your groups. 

Nov 24, 2014 03:28 AM
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Hi Whitney, Good guide as how to sell your home or rent it and how to buy a new home. Easy to understand and follow. 

Nov 26, 2014 04:24 AM
Sharon Paxson
Compass - Newport Beach, CA
Newport Beach Real Estate

Good Morning Whitney Watson, great information about moving up both for first time buyers and home owners consider turning their home into a rental. 

Dec 03, 2014 12:56 AM