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How to Buy a House Before You Sell Yours

Real Estate Agent with RL Real Estate Group

Real estate today has become very competitive that you might find yourself frustrated with the available choices once you have sold off your existing house to make a down payment. In hot markets, sellers benefit from multiple offers. Which can be problematic for buyers, particularly for those who are working on a tight timetable before their current home closes. If you are confident that your home will quickly sell, you might want to buy a new property first before you sell your current one. Here are four way to help you do so quickly and efficiently.

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401(k) Account Loan Most employers allow loans against their employees’ 401(k) retirements accounts to buy a house. This is a low-risk and low-cost way to finance your home purchase before you sell your current house. Keep in mind that you need to pay the loan in a short period if you change employers or change your job. Otherwise, this is considered a withdrawal and will be subject to penalties and taxes. 401(k) accounts are rolled over at new employers, but not for loans from a 401(k). 

Unsecured Bridge Loans A bridge loan is used to give funds for a short period of time until another source of funds is available. In the context of the home loan market, a bridge loan allows you to close on the sale of the new property before you close the sale on the old house. However, a bridge loan is not available unless there is a binding contract of sale on the current house. The rate might be high than the other options. But the interest payment will not amount to much since the loan’s covered period is short. 

Home Equity Line of Credit Getting an unsecured bridge loan is not possible without a binding contract of sale. In this case you can get a home equity line of credit (HELOC). A HELOC allows you to get the amount you need to close the sale on the new house. This is only possible if your house is not yet listed for sale. Otherwise, this option might not be available. If lenders go on a property not listed for sale, there is bound to be a cancellation charge and you might end up paying for closing costs. 

Secured Bridge Loan Property If none of the above works for you, the lender that finances the purchase of your new property might be willing to give a secured bridge loan on your current house. There are lenders who will do this as a marketing incentive. If you take your purchase loan from them, you will not have to worry about selling your old house before the new is bought. The disadvantage of this option is that the purchase loan has a high possibility of being over-priced. When choosing the best route for you, it is best that you consult an expert to give you a clearer and deeper understanding of each of these options. This way, you are guaranteed of the best possible results. Get assistance from a reputable real estate company like RL Real Estate Group. Reach Regan Laughlin and her team at 605-212-8431 or regan@rlrealestategroup.com. You can also fill up their contact form by clickinghere. 

Houses for Sale in Sioux Falls

Golden1 Agents
San Mateo, CA

Thanks for sharing this.

Jan 04, 2018 02:05 AM