Can you buy a new home if you haven’t sold your current home?

Posted On December 01, 2016

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You have to relocate for a job, and you only have two weeks.  Family circumstances make your spouse relocate but you are still looking for work in the new location.  You found the home of your dreams and don’t want it to go off the market before you’ve sold your current home. 

These are all common scenarios homeowners face when they are looking to buy a new home while still carrying a mortgage on their current residence.  Yes, it is possible to qualify for financing while you are still paying your current mortgage.  You can even put a “contingent” offer in on a new home, meaning the purchase is “contingent” upon the sale of your current home.

You do have other options.

Buy-Low, Sell-High – the housing market is seasonal.  When you buy your new home in the off season (fall and winter) and sell you current property when the market is busy (spring and summer) you have the opportunity to save on costs.  If you are financially capable of carrying two mortgages for three-to-six months this is a great alternative.

Rent Back – if you get an offer on your current home before you settle on your new home, sometimes you have the opportunity to “rent-back.”  In this arrangement, the seller can continue living in their current residence and pay the new owner a monthly rent equivalent to the new mortgage payment. 

Bridge Loan – in this scenario, you can use your existing home as collateral to take out a “bridge” or “swing” loan to use as the down payment on your new home.  Once you sell your current home, you can pay off the mortgage and the bridge loan.  This option works best in a fast-appreciating market and can be risky, since a bridge loan typically costs 5-10% more than a typical equity loan. 

Your buying and selling schedules may not always coincide.  There are other options if you need to carry both mortgages simultaneously.  If you have any questions about your specific situation, please let me know!