Buying a home while yours is still for sale can be a challenging situation. But, it is certainly not uncommon. If you have the ability to make two mortgage monthly payments, you may be able to complete your new home purchase before the sale of your current home is final. However, if you can’t afford to do this, you will have to pursue other options.
Understanding the Issue
As long as you own your current home, you must continue to pay your mortgage. Not only will this reduce the amount of funds you have available to pay a new mortgage, but it may also prevent you from qualifying. If your debt-to-income ratio is too high with your current mortgage included, your lender won’t approve the new mortgage loan until your current home has been sold and the mortgage has been paid in full.
Making Both Payments
If you are able to make both mortgage monthly payments and your lender approves, you can go ahead with your new home purchase. You will be able to take possession and move in, but you will be responsible for maintaining your old house and keeping up with your mortgage payments until it sells.
Purchasing with Contingencies
If you cannot afford to make both payments, or your lender won’t allow you to take on a new loan before selling your current home, you can still shop for a new house. However, you will only be able to make a contingent offer on the home you wish to buy. This means that your offer is dependent on the sale of your current home, and you won’t be able to close on your new home until the sale of your old one is finalized. While some sellers are willing to accept contingent offers, others are not. In most cases, it will depend on the state of the local housing market, your proposed purchase price and the seller’s preferences.
If you are hoping to buy a new home while yours is still on the market, Starboard Financial can help you come up with solutions to your home buying situation. Contact us to learn more. We are here to help you!