Last edited 30 Oct 2019

Home Buying Guide: Should you Buy or Sell First?

Contents

[edit] Introduction

When you’re in the market for a new home, you have one serious dilemma on your hands. Should you sell your own home first or buy a new one first? This may seem like a very difficult decision to make, but when you take these factors into consideration, you’ll easily be able to make the right decision.

[edit] Not being able to qualify for two mortgages

In order to buy a home before you sell, you’ll need to qualify for a second mortgage or have the cash to hand. Your plan to sell your current home will be irrelevant to the lenders who are considering your second mortgage application. The lender will simply assume that you intend to keep both of the homes, so your debt-to-income ratio will need to support two mortgages. Your monthly debt payments should be less than 36% of your monthly gross income. In most cases, this simply isn’t possible. Therefore, it’s much wiser to sell first.

[edit] Not risking two mortgages

As well as not being able to qualify for two mortgages, risking them isn’t smart either. If the world was perfect, the timelines of you buying a new home and selling your old one would match up perfectly and you won’t have to worry about anything. Alas, this simply doesn’t happen often. In most cases, you’ll end up carrying two mortgages for at least a few months if you decide to buy before you sell your old home.

[edit] Not being ready to commit

It simply doesn’t make sense or feel like the right time to buy in some cases. Getting the feel of a neighbourhood before you move in is always advisable. After all, you’re making a huge commitment. If you have kids, you’ll want to take advantage of the schools in the new area. Renting can be the more sensible option for the time being. You don’t have to rush in blindly into buying before you sell your home. You can test out the neighbourhood by renting in it and then comfortably look for homes you can buy if you end up liking the area.

[edit] Conclusion

This isn’t a decision to take lightly. You’ll need to take the above factors into consideration and come up with a solution that benefits you and your family the most.

[edit] Related articles on Designing Buildings Wiki