Thinking about moving again? You’re not alone. Every year, people decide to buy a new home. This group of people are known as “move-up buyers.”
What is a move-up buyer?
A move-up buyer is a current homeowner that desires to sell their first home to “move up” into second/new home.
The reasons vary. Maybe you need more space for a growing family or less space now that your kids have left the nest. You might have to relocate due to work, or you’ve started retirement and want to move to a warmer climate.
Whatever your reason, buying a home for the second time is a transition you need to prepare for, especially since most people need to use the proceeds from the sale of one house to help fund the purchase of the other.
Here are some other factors to keep in mind as you’re looking to complete a move-up buy transition.
Understanding the transition of a move-up buy
Even though you’ve already been through the home buying process before, that doesn’t mean there still aren’t some new things to think about this time.
A big part of that is this time you’ll be buying a new home and selling your current one at the same time. That adds another level of stress you didn’t have to worry about the first time around.
From there, you have one big decision to make: should you sell your current home first or buy your new one first? There are pros and cons to each that you’ll need to consider and decide the best option for you.
Pros and cons to weigh
Some of the pros of selling first include, you don’t have to worry about paying two mortgages and don’t have to feel rushed during the buying process. However, the cons could be that you might not easily find something in your budget, and you could be stuck between homes for an extended period.
On the flip side, one of the biggest pros of buying before selling is you’ll have a home ready to move into, which can help cut moving costs. The big con, however, is the potential that you could be paying two mortgages at once.
Tips to help you navigate a successful move-up purchase
Once you’ve decided which approach you’re going to take, it’s time to start the home buying and selling process. Here are a few tips that can help you make it a much smoother process.
1) Take the temperature of the market
The housing market has been hot for much of 2020, which is great for selling but poses some challenges for buyers. With increased competition, you might get into a bidding war or need to lower your expectations to get the home you want in your budget. You might find, financially, you’re better off waiting a few months.
2) Get organized and prepare the necessary documentation.
When you’re buying and selling simultaneously, it’s critical to have your paperwork in order. Just as you did when you were getting a mortgage the first time around, make sure you have your pre-approval letter, job verification information, bank information, and other necessary documentation ready to share so you can move through the process more efficiently.
Safely store a physical binder or folder on your computer/mobile device that you can use to organize and access this information at a moment’s notice.
3) Understand your financing
In most cases, you likely won’t be able to buy a new home without the proceeds from your current one, so you’ll need to get your financing in order before you completely jump into the process. There are mortgage calculators and other tools you can use to help you figure out what you’ll need. Also, find out your options in terms of down payment assistance. There are programs out there if you do decide to buy before you sell and need a down payment.
4) Find a great real estate agent
Depending on where you’re planning to move, further away or in your local area, you’ll want to connect with a real estate agent to help you through the process. Many agents can handle both the buying and selling process for you, which can help. Also, if you get stuck during the selling process, they can help you find temporary housing or even tenants to rent your current home.
We work closely with a wide variety of top-notch real estate agents in the markets we serve. Ask your loan officer for an introduction or recommendation. They will be able to give you an honest recommendation based on the performance of past transactions they’ve completed with agents in your community.
5) Prepare your home to sell
Something you didn’t have to worry about when you were buying before also had a home you needed to sell. There’s plenty involved with selling a home, including making sure it’s got good curb appeal and is prepared for showings. So you might have some home improvement projects you want to consider tackling now.
6) Prepare for a simultaneous (same-day) closing.
It’s possible that the timing will be tight when you are buying and selling a home at the same time. While it can be challenging, it’s not impossible to close on the sale of your first home and the purchase of your new home on the same day. Here are a few tips to help you navigate this possible outcome.
The bottom line
Are you ready to transition and complete a move-up buy? OVM Financial can help you throughout the entire loan process. It’s easy to begin in just a few steps with our QuickStart application. In the meantime, check out this blog post to learn more about our most frequently asked questions from prospective move-up buyers.
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