How to Purchase Before You Sell

    How to Purchase Before You Sell

    Sep 22, 2017

    For most of my clients, the purchase of a new home hinges on the sale of their current home. But did you realize it's possible to choose your new home and close escrow before you even have an offer on your current home?

    There are two ways to do this and both require some level of cash to make them work. In the first scenario, we have a buyer who is sitting on a pile of cash and can afford to buy a home without a mortgage. I, for one, am not sitting on a pile of cash, and most of my clients aren't, either. So that leads us to the second option...

    For buyers who are planning on putting most of the equity from their current home towards their new home purchase, there is a way to do this through the use of a down payment, a first, and a second mortgage. As I told you to begin with, both options require some level of cash. In this second option, one possible way to do this is to put 10% down, take out a second mortgage on the new home in an amount equal to the proceeds you expect to get from the sale of your current home, and the balance becomes the amount of the first mortgage. Once your current home sells, you use the proceeds to pay off the second mortgage and you are left with just the first mortgage!

    There are many ways to put a transaction like this together. What they all require is enough cash to put a down payment on the new home prior to the sale of your current home. They will also require good credit and substantial income to show you can service both mortgages until your current home sells. If you feel this type of transaction might be something you are interested in, give me a call or send me an email and I will arrange for you to speak to a lender who is experienced with the "Buy First, Sell Last" method of home ownership!