Caught in between selling and buying a home?
Selling a home and buying a new one can be a difficult balancing act. A homebuyer can take a liking to a home that is for sale, want to make an offer to buy it, but be hesitant because they have yet to sell their existing home. In an ideal world, both transactions would occur simultaneously. However, homebuyers and sellers can get caught in between real estate transactions. I can provide several tips about increasing the chances of coming close to selling and buying at the same time and what to do if a caught-in-between situation arises:
Consider bridge loans: Getting a bridge loan may be an option to move ahead with the purchase of a new home, while still waiting to sell the current home. A bridge loan means borrowing from the current home's equity until the proceeds from its sale is obtained. With some bridge loans, the requirement is to pay just the interest. Other bridge loans require a single payment of interest and principal when the loan needs to be paid back. There are times that bridge loans can be extended, but as they can be expensive if protracted, it's best to use them for overlaps of a few days between closings, or at the most, a few months. Note that with the mortgage crisis, bridge loans may be hard to get.
Consider whether to buy or sell first: There is still a possibility of getting caught in between even with a prior-sale contingency in the purchase contract. Homeowners should consider whether it is better to buy or sell first. It is important to note that most people need to sell their current home in order to qualify for a loan to buy their next home, which is usually more expensive.
Coordinate a lease from the buyer: Many people find themselves in a situation when the sale of the current home has been finalized but the purchase transaction is still not completed for the new home. One way to bridge the gap is to lease the current home from the new buyer until it is time to move into the new property. An attorney should draw up a contract or lease agreement. Coordinating a lease is effective because it alleviates financial concerns and removes the hassle of having to go to a temporary residence before finally moving into the new home.
Look into renting: The buyer may not always be able or willing to lease back the home, so another option to consider is to rent another property. Although relocating twice in quick succession is not ideal, renting serves as a quick fix and can be a necessary option before moving into that dream home.
Review home equity options: If it is necessary to borrow for a longer period than a few months, the best option is to use home equity, particularly if a sizeable equity has been built up. Options include a fixed-rate home equity loan and a home equity line of credit. For more information, call Karen Scopetski at… 508-393-4442 318 Main Street Northborough, or visit… www.karenscopetski.com
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