Buy Your New Home, Then Sell

This is an option that works well for people who have a good deal of equity in their current home or great credit scores and strong income. You would work with your lender to secure a non-contingent pre-approval letter, which basically grants you permission to purchase a new house without selling your current house. In most cases, our clients who go this route do not actually ever own both houses simultaneously.

Pros:

1.  This allows you to fall in love with the new house before you find the buyer for the current house without the fear of being bumped. You are in the strongest of negotiating positions because the sellers are more confident of your ability to perform. This may help you to negotiate for favorable terms on the house you purchase (such as a lower price).

Cons:

1.  There is always the chance that the buyer will not show up fast enough and you will have to close on the new house first. If this happens, usually you would take out a bridge loan (a loan that draws your equity from your current house for use as the down payment on the new house; the bridge loan is repaid and closed upon successful closing of your current house). You will end up having two closings on your current house, one to pull out the equity, the other to sell to the new buyers, and there will be additional expenses for having two closings.

2.  There is always the possibility that you would have to make a house payment on more than one house in the same month.

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