High on the list of stress-inducing situations is the process of buying a home. And while folks tend to think of the first home as being the hardest, I believe it is the next or your “forever” home that causes the most consternation.
The process of buying a home has a lot of moving pieces to contend with for the buyer; and when you add in the sale of your existing property along with the need to be financially stable enough to balance both homes (hopefully not for long), it can make the move feel untenable. Here are a few things that I wish I had known back when I was making that move:
- Cash is KING right now. Having excess savings set aside will help the process—but it is not the only way to finance your move.
- You may be able to use your current home’s equity to finance your down payment. Depending on the situation, doing this can give you a leg up on the competition, particularly in this hot real estate market. To accomplish this, you may be able to use a home equity line of credit (HELOC) or a second mortgage. In some cases, a bridge loan may also be a wise decision.
- Your investment portfolio may offer some temporary cash for that next down payment. If you have assets in a taxable investment account and don’t want to sell them, you may be able to use a margin loan or a securities-based line of credit. Like a HELOC, you can borrow against the value of something—in this case, your stock portfolio.
- You may be able to negotiate a lease back of your current property if the next place is not available.
- With home prices on the rise, rolling equity into your next home could help keep your payments reasonable.
- Speaking of payments, interest rates are also on the rise. Working with an experienced mortgage broker can help you get set up for success. Start that process early and look for opportunities to lock in lower rates while we have them.
- Practice your new payments. Setting aside the additional amount you expect to pay after your move can accomplish two things: Add to your savings and get you used to higher expenses.
- Get creative! There are many ways to make that second purchase successful. An experienced team can help you find ways to get your offer accepted.
Have patience. Buying a home can be stressful, especially when you already have a property. Patience and a sense of humor can go a long way toward making it a rewarding experience!
We love helping our clients navigate changes, like moving up. If you have questions about how to do this successfully, let us know.
Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.
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Aimee knows how overwhelming big life changes can be and enjoys serving as a sounding board for her clients when they have decisions to make. Simplifying a client’s financial life and making sure all those puzzle pieces fit together is what she loves to do.
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