12 Weeks to Buying or Selling a Home: Week 7
A Real Estate Series
Woop woop! It’s Week 7 guys! You have now officially stuck with me for more than half of my series and for that, I appreciate you! This week we are jumping head first into what buyers should NOT do while trying to buy a house and how sellers can manage both selling and buying a home at the same time! Does that sound like too much? No worries! I am going to walk you through every step so let’s begin!
What should I NOT do when buying a home?
We all know that buying a home can be a bit of a stressful process for a number of reasons, but let’s not make it harder by making irresponsible decisions along the way! Here are some things NOT do during the loan approval process:
Spend money on credit cards. Okay, I know that your favorite furniture store is having a 20% off sale right now and there is a leather sectional with coordinating rug that you are just dying to have for your new house! NO. Stop it. If you buy it and use your credit card to do so, you may not have a house to put that sweet new couch in so DO NOT DO IT! Wait until after closing to get your fancy decorations and furniture!
Buy a new car. I know, I know. You are on Cloud 9 because you got approved to buy your very own home - how exciting! So you think, I deserve a brand new set of wheels now, right? WRONG! Debt to income ratios are extremely important during the homebuying process, and any new debt may push you past this threshold and cause the lender to deny your loan. You do not want to be in this position!
Put mattress money into the bank. Guys, if you have cash laying around- I don’t care where it came from and may not want to know- you cannot just go deposit it into the bank and use it as down payment money to buy a house. Lenders need to see records of where this money came from to be able to use it as funds to buy the house. If this is you for whatever reason, make sure this money is deposited long before you start the homebuying process!
Ok so that was pretty short and to the point, but yet super important information! Basically don’t rack up new debt or deposit untracked money into your bank account before loan approval!
I want to sell my home, but I need to buy a new home also. How does that work?
This can be rather complex, but don’t worry! There are several ways to make this work and your agent should walk you through each of them so you can decide what fits best for your needs.
Find a home first and write the offer contingent on selling yours. This is probably the most common way selling and buying at the same time is done. Is it the best way? No, not always. Basically in this scenario you find your dream home first, and then list your house for sale. Of course the seller of the home you are buying must be willing to accept your offer which means they will be waiting for you to sell your home to move on with selling theirs. One of the main downsides to this option is that you could pretty easily lose the house you are buying if they receive another NON-contingent offer on their home. At this point you are given a certain timeframe (usually 48 hours) to sell your home and remove the contingency. You definitely need to prepare your emotions for losing the home you loved!
List your home contingent on finding suitable housing. This one is my personal favorite. In this scenario you list your home FIRST but with the condition that any buyer who writes an offer understands that you must find a home or else the deal will not go through. Usually the buyer will give 30-45 days for the seller to find suitable housing. This allows the seller to then go out, find a home that works for them, and write an offer that is NOT contingent on selling theirs (because they are already in contract with a buyer). At this point, both deals move forward through the loan process and can be scheduled to close on the same day. This one is a little confusing but really works well when it is used correctly!
Get an approval for a new home that allows you to keep your existing home also until it sells. To be completely honest, many people will not qualify for this option. This one requires that you are able to afford both the mortgage on the home you currently live in and the new home at the same time. If you are able to do this, and comfortable with having double payments for a few months until your house sells, this is a viable option. It also gives you flexibility in doing updates to your new home, moving all of your stuff, etc. You can also do something similar by getting a special type of loan called a Bridge Loan which uses your current home equity to help finance both homes. Both of these options will definitely require you to seek expert advice from a lender!
It’s not really that hard guys! It seems super scary, but with proper guidance this can be done very smoothly!
That’s all for this week! There is a lot of information in here so be sure to reach out if you have any questions at all or if you need some help figuring out what would work best for you. Join me next time for Week 8 where I give you all the fun tips on packing and moving - both with and without kids!
About the Content Creator:
Courtney Burke is a real estate agent and co-owner of Welcome Home Realty Group, LLC located in Franklin, Indiana. She spent 9 years as a Biology teacher at Franklin Community High School but left teaching in 2021 to pursue a career in real estate alongside her husband, Chris Burke, who has been in the business since 2014. She uses her background in teaching to educate her clients on the steps to home buying, selling, and investing and help them reach their goals.
For more information, contact Courtney at 317-416-3073. You can also visit her website at www.whindiana.com.
