Photo: © Steve Debenport - iStockPhoto
Buying your first home was a great experience, and you've built up some equity in your investment. Now you want to purchase a new home and use the equity and profit from your current house as a down payment. While there is no certainty that your old and new dream houses will close at the same time, there are several options to choose from when moving up. But, first, make sure to arrange your financing and hire a real estate broker who is experienced in this type of transaction. Good negotiation skills are important for both selling and buying. This is not a do-it-yourself type of project. Once you've hired a professional, choose one of the following that best suits your financial situation:
Buy First: This option is not possible for most people, but it's ideal if you can afford two mortgages for a few months. Buy the home you want, move into the new house, then put your current residence on the market.
Sell First: This is probably the best option for most people, but it does include more work and inconvenience. Sell your house and move into a temporary rental home or apartment while you look for the right home to buy. You can put most of your belongings in storage and keep out only what you absolutely need. When you find the house you want, you'll have to move again.
Contingency Purchase: Find the home you want to purchase and make an offer contingent on the sale of your house. The problem with this option is that some sellers don't want to take their home off the market based solely on the hope that the potential buyer will sell their house.
You only buy a first home once. After that, you will always have to deal with both a sale and a purchase. You can be a successful move-up buyer by working closely with your real estate broker and choosing the option that will work best for your finances.