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David Palmer and his lovely wife Olivia had bought their first home six years ago. It was a lovely property that overlooked the waterfront and while it was a bit small, it was perfect for them. However, that was then and this is now – Olivia was expecting their first child and the waterfront home that they had was simply too small. So David and Olivia had to do what many homeowners have had to do throughout the dawn of time – they had to change homes. If you thought that buying your first home was stressful, then you better be prepared if you are ever in the changing homes real estate process. That is because changing homes involves two processes: selling your home and buying a home. So, what does one do first? Well, there really is no right or wrong answer. Your strategy will ultimately depend on the type of person you are.
The most common strategy of a homeowner changing homes is to sell their home first then buy a new home. This is probably the most financially stable strategy of changing homes, and it allows the homeowner to know the amount of available equity that they have to invest in their next home. From a fiscal point of view, a prospective homebuyer who has already sold their home before changing homes has a stronger financing and negotiating position because they have turned their real estate investment into actual money. Additionally, it allows homeowners to know when they need to move and it provides the homeowner with a clean slate when they move into their new home. While selling a home first before buying appears to be the best option in terms of money, it doesn’t always turn out that way.
By selling your home first, you are putting yourself into a deadline to buy a home. Depending on your luck and the homes available in your neighborhood, you may have no trouble or a ton of it. It is not unheard of that people who sell their home first before buying their new home are forced to live in temporary homes for some time. If you do decide to sell first than buy when changing homes, make sure that you have a backup plan if your dream home is not available to buy. The other strategy for homeowners when changing homes is to buy their next home first then sell their old home.
This strategy provides you with peace of mind … to a point. While you are able to enjoy the fact that you won’t have to find temporary housing, you will have to worry about the financial burden of having a home that you want to sell. Depending on your financial situation, this could be a little problem or a big problem. If you are concerned about the prospect of having to carry more than one mortgage, than this option may not be the best one for you.