Walla Walla Info - Home / Financing / Loans / Sell Your Current Home Before Buying a New Home?

Should you sell your current home before buying a new one? It's a quandary: Should a buyer sell an existing home first or make an offer on a new place and hope the old one sells fast? In today's tight market, purchase offers made contingent upon the sale of another home often are dismissed out of hand. This leaves home buyers to consider such questions as: Can they afford two mortgages if their old home doesn't sell quickly? Should they apply for a home-equity line of credit or a bridge loan to see them through the transactions? Are they willing to move into a rental temporarily, if they must? And, if they sell and don't find a house to buy, how unhappy will they be sitting on the real estate sideline while the market appreciates without them? These considerations add angst to home buying, and people handle things in different ways. Take Alison and Brian Geib of Manhattan Beach, Calif., who were committed to a strategy of "buy first, then sell' when they found a 1950s Cape Cod-style home in Manhattan Beach's tony "tree section.' They paid $1.35 million for a two-story, 1,863-square-foot house with three bedrooms, a loft and two bathrooms. Because most desirable homes attract multiple offers, their bid was about $50,000 above the asking price and wasn't contingent on the sale of their current home. The week after their purchase offer was accepted, the Geibs listed their three-bedroom, 21/2-bathroom town house in northern Redondo Beach, Calif. The first weekend on the market, they received seven offers, six of them above the asking price of $719,000. "If you have property you feel would sell quickly, there's nothing wrong with buying first and then selling, like we did,' Allison Geib said. They solved their small timing gap by renting back from their buyers for two days before closing on their new house. Lori Bendetti took a different approach. She sold her three-bedroom, two-bath Malibu, Calif., home and is leasing in the same neighborhood while she continues to look. Bendetti, who prefers not to be rushed, said, "Selling first buys us time to find the right house. And then when we do, we're cash-ready. And we would have time to do any work that the new house required.' The downside: Mortgage interest and property taxes are deductible, but rent isn't. Some people choose either to tap into a home-equity line of credit or get a traditional bridge loan. "Once your property is listed, you won't be able to get a line of credit on it,' said Philip X. Tirone, executive loan officer at United Pacific Mortgage in Los Angeles. Banks don't want to extend credit that is going to be paid off quickly. So he recommends that buyers establish their lines of credit before listing their properties. --More on Home Financing--

Posted By Site Admin on 2005-12-04 16:22:14.853 | Topic (Financing / Loans)