Should you buy before selling?
Best protocol when selling
In this edition of Ask Brendan, we're going to talk about what the best protocol is for getting out of your house and getting into a new one. And the short answer is, yeah, it's always better if you can buy first and then sell, and the reason why is because it's so much easier to sell an empty house.
It's tough, we get it. Sometimes you just need to pull the money out before you can buy something and it just doesn't work out. You have to be home when you're trying to sell the place. No problem. We can do that too, but let's say you want to try and you want to buy a place first and then sell your house, but you have all the equity sitting in your current house in order to buy. What do you do? Well, there are a couple of different things you can do.
Get a HELOC
One is you can get a home equity line of credit (HELOC) on the house that you have. As long as you have a good amount of equity you can do this. Banks want you to have at least 25% equity and then you can borrow against the rest.
Get a Bridge Loan
The second way to do this is called a bridge loan, which is kind of the same concept. The way it works is a lender will actually give you the cash to buy the second home, and then you sell the first home and you pay off the loan or restructure the loan on your new house. Bridge loans kind of come and go. They're there, and then they're not there. It really depends on what banks are seeing with interest rates and the market and the economy. So it's not easy to sort of long-term plan to just get a bridge loan and make that work. It is smart to long-term plan about how you want to move up in-house over the long haul.
Get Professional Help
Whether you want to just save money and put it towards the new place, or you want to take a line of credit out or you want to get a bridge loan, all those options are available to you. It's best to consult a real estate professional early in the process so you can find out what your options are and go from there.
