Yes, you can buy your next Central Texas home before you sell the one you’re in. You just need the financing and the contract terms lined up before you make an offer.
Most people worry about the same two things: carrying two mortgages, or selling first and having nowhere to go. Either way, you’re trying to time two big deals so you can move without a money crunch in the middle.
In many Central Texas neighborhoods, buyers have more to choose from than they did a year ago, which gives you more room to negotiate on the house you want. The flip side is that your current home may take longer to sell than it would have a few years back. That’s why the plan matters.
Here are five ways homeowners handle it, starting with the simplest.
1. Make your offer contingent on your sale. A sale contingency is a clause in your purchase contract that says your offer to buy a new home depends on your current home selling. You’re telling the seller, “We’re ready to buy, once our house sells.” If your house doesn’t sell and the contingency is written correctly and you meet its deadlines, you can usually get out of the deal with your earnest money protected. Have your agent and lender go over the exact terms before you count on it.
It keeps you from carrying two mortgages at once. The catch is that when a seller has other offers, a contingent one often looks less certain, and some sellers will pass on it.
A delayed closing is the middle ground. You and the seller agree to push back the closing date, so your next home stays under contract while you find a buyer for the one you’re in. Sellers who won’t take a full contingency will sometimes agree to this.
2. Use a bridge loan or borrow against investments. A bridge loan lets you make an offer that doesn’t depend on selling first. It’s a short-term loan, typically lasting six months to a year, that gives you access to money for the next purchase before the equity in your current home frees up. It covers the gap between buying and selling.
Some homeowners use a securities-backed line of credit instead. That lets you borrow against your investment portfolio (stocks, bonds, mutual funds) without selling those investments, which helps when the two closings are close together.
3. Tap the equity you already have. A home equity line of credit (HELOC) is a revolving line of credit against the equity in your current home, meaning what the house is worth minus what you still owe on it. You can put that money toward the down payment on your next place.
Some people take a short-term loan from their 401(k), the retirement plan through their employer. Because you’re borrowing from yourself, the interest you pay usually goes back into your own account instead of to a lender. You do give up some possible investment growth while the money is out, so talk it through with a financial advisor first.
4. Use a buy-before-you-sell program. Several brokerages now have programs built for buying before you sell. Watters International Realty has its own Guaranteed Sale Program, a Watters-backed solution for eligible Central Texas homeowners. It isn’t right for every house or every seller. For the ones who qualify, it takes a lot of the pressure off timing two deals.
5. Sell first, then rent back. This one is technically a sell-first plan, but it solves the same timing problem. A rent-back, sometimes called a sale-leaseback, means you sell your current home first and get your equity out. You stay in the house for a while as a tenant and pay rent to the new owner while you close on your next place. You don’t have to move out right away, and you can buy with cash in hand and no contingency.
You can buy before you sell. Which way makes sense depends on your finances, your timeline, and what the market is doing where you live.
If you’re thinking about a move, call us at 888-333-4838 or visit christopherwatters.com to set up a one-on-one meeting. We’ll go through your numbers with you and figure out which of these options fits your move.
