Stewardship Capital

Buy Before You Sell: Ways to Buy Your Next Home First

Buying a new home before your old one sells can feel risky. It can also be the smoothest way to move. Lenders have a few ways to make it work. This page explains the common options, the tradeoffs and what lenders look at.

Can I buy a new home before I sell my current one?

Yes, many people do. The main question is how you will handle two homes for a while. A lender needs to see that you can afford both, or that the first home is on track to sell. The right option depends on your equity, your income and your timing.

What are the ways to buy before you sell?

Can I use a HELOC on my current home?

Yes, often. You can open a line of credit on your current home and use it for the down payment on the next one. This is best set up before you list the home. Our HELOC page covers the basics.

Can I do a cash-out refinance first?

Some owners refinance and take cash out before they list. It can also be a way to tap equity. It changes your current loan, so Stephen compares it with other tools. See our Refinance page.

What is a bridge loan?

A bridge loan is a short loan that uses the equity in your current home to help you buy the next one. It is paid back when the old home sells. It is often more costly than other choices, so it is used for special situations.

What about making an offer that depends on my sale?

A contingent offer says you will buy only if your home sells. Some sellers accept these, and many do not, especially in a busy market. Realtors know the local picture best.

How does a lender count my old mortgage payment?

When you keep both homes, the lender may count both payments. That can make it hard to qualify. If your current home is under contract to sell, a lender may be able to leave out that payment, if the right papers are in the file. Rules vary by loan type and investor, so Stephen confirms them on your file.

What is a rent-back and how can it help?

A rent-back lets a seller stay in the home for a short time after closing. If you are the seller, a rent-back lets you close on your sale and still have time to move into the new home. If you are the buyer of a home with a rent-back, the lender has rules about it. Tell Stephen early.

What documents will the lender ask for?

• Your current mortgage statement
• Your listing agreement or sales contract, if the home is listed or sold
• HELOC or bridge loan papers, if you use one
• Proof of savings for the down payment and reserves
• Your income and credit documents

The exact list depends on the plan you pick.

How can realtors help a buy-first client?

Timing is the biggest piece. Realtors can line up the closing dates, ask for a longer escrow or a rent-back and price the old home to sell. Early talks between the listing agent, the buying agent and Stephen help. A clear plan lets the client make an offer with confidence instead of guessing.

What are the risks?

The biggest risk is carrying two homes if the first one takes longer to sell. Plan for the cost of both, plus moving, repairs and holding costs. A realistic price and a good listing plan help. Think about a backup plan before you start. Our seller credit and buydown calculator and seller concession limits pages can help you plan around seller credits, and our Buy a Home page covers the buying steps.

This is not a quote, a commitment to lend or an offer of credit. Stephen Chakerian, NMLS #2193331 | Stewardship Capital, a team of Barrett Financial Group, L.L.C., NMLS #181106 | Equal Housing Opportunity.