Buying a New Home before Selling for Relocation
When a property owner must relocate to another area, such as for a job offer, they need a solution for selling their existing home. The problem with this is time. When an employer, for example, wants you to move to a new area and start work, they typically do not want to wait too long for that to happen. And, yet, the real estate market isn’t very fast-moving in most areas. This is when many people consider buying a second home before they sell the first.
What Are the Advantages of Buying a Second Home?
You need somewhere to live. Buying a second home is an option and can work for many people. Doing so can mean some key advantages:
You get to move into your new home and establish yourself in the community faster. That’s important for many people, especially with children.
You don’t end up splitting your family up while you wait for your existing home to sell. In areas where the real estate market isn’t solid, this can mean months apart from each other.
You also save some money. Experts have shown that it can be very expensive to sell a current home and then buy a new home due to the fees involved.
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What Are the Disadvantages of Buying a Second Home?
For some, this does not work as well as it seems it could. Some of the key disadvantages you may face include:
You may not qualify for a second home unless the first home sells. Some lenders place this in the loan contract you agree to when buying a second home.
In a long-term situation, you’ll continue to make payments on both properties for some time. This can be financially draining in some situations. This includes costs for transportation and maintaining two homes.
Buying a second home without selling the first may also create more liability risks for you. If you choose to rent out the first home, for example, you’ll need to manage the property. Most insurance companies don’t insure vacant homes, either.
What to Consider Before Buying a Second Home
When you are relocating, it is easiest and less stressful to simply move. There are options to help you to move without having to try to balance two mortgages or two households. However, if you decide to do so, you can find the help you need through your lender. Many will offer loans to help cover the costs of buying a new home with contingencies on the sale of your existing home. If you can come up with a new down payment, manage the costs of both properties for as long as the market takes, and manage the liability risks, this may be an option for you.
For others, the clean break that comes from selling one home and moving into a next is more important. Be sure to consider the advantages of simply being able to start your new life in your new location without the hassles of where you live right now.
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