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Buying and Selling a Home at the Same Time in California
Are you ready to upsize or downsize your home but not quite sure how to make it happen? Buying and selling a home at the same time in California may seem a little tricky given the market, but it can be done. The team at New Way Mortgage is here to help!
The California housing market is competitive and still experiencing some inventory challenges. That means buying a house before selling your existing house, or doing both at the same time, requires some strategy. So what are your options to secure your dream home while selling your current home?
1. Make a Contingent Offer
A contingent sale offer is based on the sale and closing of your existing residence, which provides the funds and down payment for your new home purchase. The plus side to making a contingent offer is that if the sale of your current home falls through, it would give you an out on the home you’re under contract on.
The downside is that in markets where there is a shortage of inventory, offers with sale contingencies are not ideal for sellers. In a multiple offer situation, this type of offer would likely not be attractive to the seller because it has variables outside the seller’s control. As the market starts to shift, like we’re experiencing today, contingent offers become more of a norm.
With this option, you will put your home on the market and get an offer. Then you can start looking for a home and can even put in an offer prior to your current home closing. You can write in a contingency that the first home needs to close for you to be able to buy the new home. This works best if you expect to get offers on your first home quickly.
2. Get a Home Equity Loan
If you don’t want to mess around with contingencies, which require all parties to agree, there are some other financing options we can help you with.
One of those is to pull out the equity on your current property for the down payment on your new home. You can do this through a home equity loan (HE loan) or home equity line of credit (HELOC). With this option, the HELOC or HE loan gets paid off when you sell your current home.
There are still some things to take into consideration if you go this route, so it’s important to consult your trusted mortgage experts at New Way Mortgage before getting started.
3. Get a Bridge Loan
A bridge loan is another financing option when you’re buying and selling a home at the same time. It’s a short-term loan offered by a bank to cover your down payment until your old home closes, and it uses your current home as collateral. It’s designed to be repaid in the short term. These loans have various repayment terms; some have monthly mortgage payments, while others require lump-sum interest payments.
A bridge loan helps you tap the equity in your current residence as a down payment while essentially owning two properties concurrently. It can really help get you through if there’s a lag in closing dates on both homes.
4. Use a Rent-Back Provision
One other option is a rent-back provision, which allows you to close on your old home and do a short-term rental from the new owners for a short time after closing. This works best in a seller’s market, where buyers have to be more flexible with terms to get the home they want.
The three options we’ve provided in this article are the most common, but there can be additional strategies you may want to consider based on your specific scenario. The team at New Way Mortgage is here to provide options and help get your financing in order. We also recommend working with a local real estate agent who has experience navigating simultaneous transactions and can help advocate on your behalf.
No matter what your situation is, we’re here to help you find the financing to make your dreams of a new home happen in our current market. Call or text us today at (916) 465-6639, or click here to get started.