The Art of Prospective Homebuying: Moving In Before Selling Your Current Home

Buying a new home and moving into it before you sell your current one can seem daunting, but it's completely doable with the right approach. This guide will walk you through the three critical aspects you need to get right to make this smooth transition.

Location: Strategically Picking Your Next Home

Choosing the right location for your new home is crucial. Consider your future needs, lifestyle, and proximity to work or schools. Additionally, ensure that the area you're moving to aligns with your budget and investment goals. This not only ensures that you're making the right decision for your family but also prepares you for a seamless move and sale process.

Lender: Financial Expertise for Your Real Estate Journey

Selecting the right lender is essential for securing the necessary funds to make your move. A reliable lender will help you understand the various options available, such as bridge loans, HELOCs (Home Equity Lines of Credit), and contingent offers. They can also provide pre-approval letters, which can make your offer more attractive to sellers.

Good Real Estate Company: Expert Guidance Through the Transaction

A reputable real estate company with experience in these transactions can add tremendous value to your process. They can help facilitate the linkage between your purchase and sale, ensuring both transactions close on the same day. This setup eliminates the need to move twice, stay in a temporary location, or store your belongings, making the transition as smooth as possible.

Additional Tips for a Successful Transition

Let's dive into some practical examples and advice. For instance, consider the following scenario:

In 1991, I moved across the street from the old house, rented it out, and sold it three days after buying the new house. This strategy allowed me to avoid unnecessary expenses and stress. Similarly, with my current house, I moved in October and sold the old house in the spring of the following year. Each move required meticulous planning and the right financial tools.

For the house in 1991, creative financing was key. The old house was solely mortgaged with a HELOC, with only $5,000 owed. The new house was a combination of a house and a garage, each on separate properties. I used the HELOC for a 10% down payment on the house and bought the garage the next day using an owner contract, with the seller taking a lien on the old house. This strategy kept multiple mortgages, but eventually, I paid off all debts, thus eliminating private mortgage insurance (PMI).

For the current house, I made a smart decision by talking to my mortgage broker. They sent me a preapproval letter that was more than I needed, which later came in handy when buying the new house with more flexibility.

Linking Purchase and Sale Transactions

Linking the purchase and sale of your homes is a smart strategy. When both transactions are scheduled to close on the same day, you avoid the stress of moving twice and dealing with temporary setups. This seamless transition can be achieved through chaine ferrée (linked transactions) or wash sale agreements, which ensure that you can move into your new home immediately after the sale of your old one.

By carefully planning your move, working with a knowledgeable lender, and partnering with an experienced real estate company, you can smoothly transition into your new home before selling your current one. Good luck with your home buying journey!