First-time homebuyers get a lot of attention, and deservedly so. The path to homeownership is filled with excitement, stress and lots of questions. Advice for navigating such a unique and unfamiliar process is in high demand.
But, does it get easier the second time? Transitioning from a first home to your next home can present a whole new set of challenges. While the lessons learned from your previous experience will be valuable, keeping these tips in mind may fill in the gaps.
Most of the time, a second-time buyer is also a first-time seller. The emotions that accompanied your search for a first home will likely be amplified by the combination of shopping for a new house while attempting to sell your current one.
Balancing the two can be a struggle. Prioritizing the sale may help you avoid a major disappointment. Finding a new home that fits your needs, only to see it go to another buyer because you weren’t ready to list, or didn’t have an offer on your current one is tough to accept. Find an experienced real estate agent with insight into the pricing and timing conditions of your particular market.
Even in the most favorable circumstances, perfectly lining up your move-out with your move-in is going to be a difficult task. A simultaneous closing can allow you to sell your previous home the same day you buy the new one, and offers an opportunity to roll proceeds of the sale into a downpayment on the purchase. But, if you aren’t able to coordinate the transactions with your buyer and seller, you might need an alternative plan.
Of course, you’ll need somewhere to store your belongings and a place to stay if you end up selling your home before the new one is ready. Leasing your home back from the new owner for a short amount of time can be a convenient option, and could be attractive to the buyers if they are facing a similar timing dilemma.
If you want to consider closing the deal on your new home before you have a buyer for the current one, prepare for an in-depth conversation with your lender. It may require substantial savings to cover the added costs, as well as income to support the dual mortgages. If you have a large amount of equity in your existing home, options such as a home equity line of credit may also be worth exploring as a way to finance the transition.
Significant equity might mean your first-time buyer experience was quite a while ago. If that’s the case, you could be surprised at the changes that have taken place. To prepare, you’ll want to start gathering your bank statements, tax returns and any existing mortgage information sooner rather than later.
Borrowers applying for a mortgage for the first time since 2008 may notice an increase in the financial documentation that they are asked to provide. Also, documents such as the HUD-1 or Settlement Statement have been replaced by a new Closing Disclosure designed to provide more clarity into the cost of the transaction.
No matter how many houses you’ve purchased, the value of a trusted lender will never fade. The loan origination specialists at OpenMortgage are always willing to answer your questions and guide you to your next closing. Visit OpenMortgage.com for more information.