Can You Buy A Home If Yours Hasn't Sold?

Buying and selling a home at the same time can seem like a logistical nightmare. Things don't always go as planned, and luck and timing often have a large role to play. The good news is your real estate agent is available to guide you through your situation.

There are many scenarios where a buyer needs to close on a new home before selling their old one. For example, you may have just discovered your dream home and don't want to miss it. Or you may be relocating for a new job. For most people, paying two mortgages at once is not an option. If you find yourself in one of these situations, here are some strategies that might help you buy a new home before your current home has sold.

• Propose A Sale Contingency
  Buyers have an option to include a sale contingency in their offer, which makes your offer contingent on the sale of your current home. This is a good strategy when you've found the perfect property, and you don't want to pass it up. However, sale contingencies aren't very effective in a hot seller's market. If you're competing with other offers, including a sale contingency may make your offer appear less appealing.
  
  
• Explore A Bridge Loan
  Some lenders may be willing to offer a bridge loan to help float you between the closing of your new home and the sale of your old one. However, bridge loans can be risky. If your home doesn't sell, you're still going to need to pay back the loan, and the loan terms are often fairly short. Bridge loans also typically have higher rates and fees than mortgages or home equity loans.
  
  
• Consider A Home Equity Loan
  Another potential funding option is a home equity loan, which is a bit different than a bridge loan. A home equity loan establishes a lien against your home while also reducing the equity in your property. While home equity loans have more favorable terms and rates than bridge loans, this approach is not for everyone. Home equity loans can significantly increase your debt to income ratio, which can have a major impact on your credit score and could jeopardize financing on your new property. On the other hand, a home equity loan could be a good option if you have significant equity in your current property or you're looking to downsize.
  
  
• Try Renting Your Home
  Depending on its size, location, and condition, you could consider renting your home instead of selling it. This approach could offset the burden of paying two mortgages in full; however, operating as a landlord does come with financial risks as well. You'd also only want to go this route if you already have funding for a down payment and closing costs for the new property.

Buying a new home before selling your old one can be tricky, but it's important to know you have options if you find yourself in this situation. You can also consult your real estate agent to come up with the best approach that works for your financial situation.

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