Are you ready to start looking at houses for sale on Plum Island but already own a home you need to sell? The majority of Americans who are buying a second or third home still currently own one and are therefore in a position of having to buy and sell at the same time. Though this can be a stressful situation — especially if the timing does not go as planned — you can still experience success as long as you plan and make the decisions that are right for you.
If you’re trying to decide whether you need to sell your home before you can seriously consider buying houses for sale on Plum Island, here are some things you need to know.
Look at Your Financial Situation
When buying and selling homes, you’ll often face a number of expenses. Those fees can quickly multiply if you find yourself owning two homes or having to come up with a down payment and closing costs out of pocket.
Before you decide if you should try to buy and sell simultaneously or wait to buy until after you’ve sold, think about the following:
â—¾ Do I have a way to access cash for a down payment and closing if I am not able to use the equity in my home? The median price of a home on Plum Island is $694,5000. If you were to buy a house in this price range, a 20% down payment would be $138,9000. Closing costs are typically 2-5% of the total cost of the home, adding another $13,000-$35,000. While some are able to easily access the $200,000 needed to pay these out of pocket, others would find this a major challenge.
â—¾ Can I afford to pay two mortgages? If so, for how long? If you move forward with buying houses for sale on Plum Island before you sell yours, you will have two mortgages to pay. If your home lingers on the market for months, you could find yourself in a very serious bind if you don’t have the financial strength to handle this extra payment.
â—¾ Would making a down payment out of pocket and paying two mortgages for a length of time have a serious impact on my financial future? Even those who can afford to make these payments may experience negative effects down the line if they are borrowing from their 401(k), using up savings, or otherwise compromising their emergency or retirement fund.
Talk with both your financial planner and your Plum Island real estate agent about your situation. They can help you decide if you should wait until you sell your home to begin looking at new houses to buy or if you’ll be able to manage the extra costs, even in the worst-case scenario.
Look at Your Unique Situation
Everyone’s situation is different. If you are looking at houses for sale on Plum Island because you’ve recently been relocated and you need to move ASAP, your reasons for simultaneous selling are different from someone who already lives in the area and just wants to upgrade to a larger home. Additionally, your situation will be different if you have friends or family members you can move in with should your home sell quickly, or if you own rental homes, you can use them as you look for a new home.
Talking with your Plum Island real estate agent about your goals for selling and buying is the best way to determine the smartest step forward.
Know Your Options
If you do decide to move forward with the simultaneous selling process, you need to understand what possible situations could occur and what your options are for each. Here are some examples:
Your Home Sells and You Have No Place to Live
If you quickly sell your home and have not yet identified houses for sale on Plum Island you’re interested in, you could find yourself in a pickle. In this situation, options include doing a leaseback agreement with the buyer of your home, renting a home short-term, or moving into a hotel or with friends or family while you search for a new house.
You Buy a New Home and Don’t Have Cash for a Down Payment or Closing Costs
If you buy one of the houses for sale on Plum Island and yours is lingering on the market, you’ll need to come up with the money for a down payment and closing costs. If you don’t have the cash on hand, your options include doing a cash-out refinance on your current home, obtaining a home equity line of credit, and borrowing against your 401(k) if you have a qualified plan that allows for this.
You Buy a New Home and Need to Make Two Mortgage Payments
If your Plum Island real estate agent is unable to sell your current home, but you still move forward with buying a new one, you’ll need to cover two mortgages until your house sells. Some of your options in this situation are offering the seller of your new home a leaseback arrangement or renting your current home short term. Both of these options will bring in cash that you can use to make one of your mortgage payments and take the pressure off as you continue to market your home for sale.
The Importance of Working with an Experienced Real Estate Agent
Whether you decide to buy and sell at the same time or that selling before you buy is the smartest way to go, you need to work with a professional local agent who can help you through the process. A good agent can be your partner and advisor through every step of the journey, including listing, marketing, finding the ideal home for you, exploring options if the timing does not go as planned, and closing on both homes.
If you’re ready to start your buying or selling process today, reach out to an experienced agent like Alissa Christie for professional guidance.