However, when these new homeowners find themselves ready to upgrade into a better home, there are not quite as many resources to help them tackle the unique aspects of purchasing a second home.
Second-time homebuyers are forced to contend with a new complication: in addition to purchasing their new home, they will also have to do something with their current residence. This added layer of difficulty can create some serious issues that require expert timing, or at the very least a strategic plan.
When you are trying to purchase a second home and simultaneously selling or renting out your first home, there are a number of complications that can arise.
Here are the four most likely scenarios and some pitfalls to watch out for:
The Easiest WayThe easiest way to ensure that both transactions are completed without putting your family’s financial wellbeing at risk is to first take care of selling your current home. After that transaction has been handled, you can then rent a house or apartment until you are able to find a new home to purchase.
The downside here is that you would be forcing yourself to move twice, but you would completely avoid any risk of having to carry two mortgages. You will however have to find a reasonable rental for whatever amount of time is necessary while you look for your new home.
The Less Easy WayAnother option that might work for you while still keeping the risk level low is to purchase your new home and then rent out your existing home. This option is especially useful if you have already decided on your next home and have yet to list your current home.
The only potential downside here is that you are going to have to become a landlord. That means you will be responsible for collecting rent and making any necessary updates or repairs to the property unless you hire a property manager.
Depending on a number of factors, including the quality of your new tenants, being a landlord can range from simply being a minor inconvenience to being a huge problem, so choose this option carefully.
The Dream ScenarioThe most common approach for second time homebuyers is to list their current home and then begin looking for a new home. The ideal scenario would be to find the new home you are looking for and make an offer that is contingent upon being able to sell your current home. The perfect outcome would be for you to close on your current home the same day as you close on your new home.
The only downside in this situation is that it is not very common. The stars will have to align almost perfectly in order for you to be able to pull this off, and some home sellers are reluctant to tie up their home under this kind of contingency, but it is an option worth exploring.
The Nightmare ScenarioThe nightmare scenario is the worst possible version of the dream scenario. If you go through with purchasing your new home before closing on the sale of your current home, you risk the buyers of your current home pulling out at the last minute. This would leave you stuck with the burden of trying to manage two mortgages at the same time.
The downside here is enormous. For most people, the mortgage payment is the largest portion of their monthly budget. Attempting to make two mortgage payments every month for an uncertain amount of time is difficult for many people to sustain. This could force you into a position where you are willing to take far less than your current home is worth just to get out from under the mortgage payment.
Timing is everything for second time homebuyers. As you can see there are a wide range of factors that can force you into any of these scenarios, but your local Carrington Real Estate Services agent is ready to help you plan your perfect strategy.
If you are looking to make the move and purchase your second home today, please contact your closest Carrington Real Estate Services office so we can better assist you!