Do you absolutely have to sell your home before buying a new one? Although this is usually the ideal way to do things, you don’t necessarily need to. Depending on your situation, buying before you sell is a possibility.
You can purchase a new home before your current one sells if you’re financially able to cover both mortgage payments. You’ll also need enough money for repairs, insurance and property taxes for both properties. If you’re able to afford all of this, you should be able to qualify for a mortgage on that new home.
What happens if you don’t have enough money for both, but you don’t want to lose out on buying the perfect new home? You might be able to rent your current home, which will help cover the cost of your current mortgage. Just keep in mind that lenders usually don’t count the entire monthly rent payment when determining if you qualify for a mortgage. They generally count around 75 percent of that payment. You might also need to have about 25 percent equity in order to qualify. Lenders usually also want to see enough money in your bank account to cover the cost of your current mortgage and the new mortgage for six months.
If you don’t have enough money to afford both mortgage payments and you’re unable to rent your current home, then buying before you sell isn't an option. You’ll need to find a buyer for your home before you’ll be able to qualify for a mortgage on a new home.
Need more help figuring out if you can buy before you sell? Contact Donna Hatch at 719-684-4121.
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