Selling and buying a home at the same time? How to make it work

May 8, 2024

Use these tips to confidently navigate the sale of your current home while you’re also purchasing a new one.

For anyone selling a home today, the real estate market has both positives and negatives. There is historically low inventory, which means buyers are often competing with one another, allowing sellers to ask for and get top dollar, even with high mortgage rates making homes less affordable.

So, if you’re buying a new home at the same time as you’re selling another one, it may be a great time to sell but not a great time to buy.

U.S. Bank mortgage loan officer Robert Leitzel shares advice on how best to plan and execute a simultaneous sale and purchase today.

Enlist the help of a mortgage professional early

Consult a mortgage professional, even if you are months or years away from buying a new home, advises Leitzel. Professional help navigating the different stages of buying and selling is key — and the earlier a mortgage loan originator (MLO) is involved to help you avoid borrowing missteps, the better.

For instance, many home shoppers may not realize that borrowing money or even opening a credit card soon before shopping for a home can make qualifying for a mortgage harder. “If you open any new loan or line of credit just before or while applying for a mortgage, the mortgage underwriter will incorporate the loan repayment into your debt-to-income ratio, which may harm your qualification for the new mortgage,” Leitzel says. Changing your credit profile may add delays of weeks — and sometimes months — to the process.

“A mortgage professional will take the time to assess where you are currently with your financial situation, which can help reduce any anxiety you have about selling and buying a home,” Leitzel adds. “We can equip you with the knowledge you need to acquire the next home of your dreams.”

Tap equity to cover the down payment

If your current home hasn’t sold yet, another challenge is that you may be counting on the proceeds from the sale of your existing home to make a down payment on the new one. If that’s the case and if your debt-to-income ratio is no problem, Leitzel suggests tapping your current home’s equity with either a cash-out refinance or a home equity line of credit. “That allows you to take some of the equity you’ve built up in your home and use it for a down payment,” he says.

On the other hand, if you end up selling before you close on a new home, consider renting your home from the new buyers for a few weeks or months (if they are agreeable to an arrangement). That can save you from having to move twice and from paying rent for temporary housing. lease-back strategy will allow you to stay in your house temporarily, and you’ll have the proceeds from the sale to make a down payment on a new house,” Leitzel says. “Your real estate agent can help you navigate this.”

Manage the schedule carefully

The biggest challenge of selling and buying at the same time may be timing the sale of your current home. Ideally, you would close — that is, complete the sale — of your existing home before the purchase of your new one. Your existing mortgage will be fully paid off as part of the sale, which will pave the way for you to take out a mortgage for your new house.

“When you apply for a mortgage on your new home, a lender will qualify you with the knowledge that your current mortgage will be paid off,” Leitzel says.

You accidentally found the perfect new house!

What if you find the perfect house before you find a buyer for your current one? In that situation, the financing may be more challenging since a lender will evaluate whether you can afford to carry the total of two mortgages in your debt-to-income ratio. (You’ll also be responsible for the upkeep of two houses, including homeowners insurance and utilities.)

With potential buyers outnumbering houses for sale, your home will likely sell quickly. But if financing on your new home is dependent on selling your existing one, there are things you can do to hasten the sale, such as staging your home to make it more attractive.  Quickly. But if financing on your new home is dependent on selling your existing one, there are things you can do to hasten the sale, such as staging your home to make it more attractive. 

You can also look for buyers who can close quickly. “As the seller, you have control over the terms of the sale, including negotiating a short closing period,” Leitzel says. A buyer who makes an all-cash offer can close faster than someone who must get a mortgage first. The same goes for companies that buy homes to rent or resell them. But do your homework, Leitzel advises, since you may not get as high a price. “Get an estimate but also check with a licensed real estate agent who can walk you through these decisions.”

Time the sale to your life, not the market

For anyone thinking of selling their home and buying another, Leitzel cautions against trying to time your move to interest rates or other market factors. “Waiting until mortgage rates come down may not be the best strategy for selling your home and buying another,” Leitzel says. “Sellers will get the most equity from their homes when prices are high, as they are today. But when market dynamics change — and they will — your home could sell for less, and you would realize less profit to help you buy your new home.”

If you’re selling and buying a new home in the current market, you’ll likely be swapping a mortgage with a low interest rate for one with a higher rate. But that shouldn’t necessarily deter you. “Your mortgage on your new house doesn’t have to be permanent. You may be able to refinance to a lower mortgage rate in the near future,” Leitzel says. “If you’ve found the new house you love, it’s more important to get that right. You can change your mortgage later.”

Ready to start shopping? Connect with a mortgage loan officer today and explore your home loan options.

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