With such wonderful real estate prices and interest rates still right now, lots of homeowners want to make a transaction—to a bigger home, to a retirement home, or to a different neighborhood among other things. Many buyers are wondering if they have to sell their existing home in order to buy another.
One Southern California homeowner asks, “I have a $250,000 mortgage balance and I want to purchase a new home. Do I have to sell my current property to qualify for real estate loan?” That is a great question and the answer is an interesting one.
Sell a Home to Buy One?
First off, the answer is: “yes, no, or maybe”. There are a few considerations:
- The first issue to consider is whether the homeowner wants to keep the existing home. If the homeowner wants to keep the existing home, will the home be a rental? Will the new purchase be a rental?
- The second issue to consider is whether the homeowner has enough money to make a down payment on another home. If you have enough savings to make a down payment on a new home (and even if you do not), it is important to speak with a mortgage lender or loan officer who can determine whether you will qualify to purchase another home. Lenders have lots of different kinds of mortgage programs at their disposal and can make recommendations based on the prospective borrower’s credit score and income level among other things.
- The third issue to consider is whether the seller of the home you like would participate in a contingency sale. This means that you identify a new home, make an offer subject to the sale of your current home, which needs to be listed for sale. In a fast moving market, many sellers would prefer an offer that is not contingent upon the sale and closing on the buyer’s home.
- Note that there is even something called a “bridge loan.” Mortgage lenders can tell you about the program where you are financed for your new home while your other is still on the market.
So, if you are considering the purchase of another home, the best course of action would be to speak with a mortgage lender. A Realtor® from Broadpoint Properties can provide you with a list of qualified mortgage lenders who provide reputable and professional service.
If you are located in San Diego or Riverside County and would like the name of a qualified mortgage lender, just let us know.