5 tips to sell home before buying another
Q: Who can afford to buy before selling?
Buying before selling isn't feasible for buyers who don't have enough money to make a down payment or don't earn enough to qualify for two simultaneous mortgages.
Before the financial crisis, home sellers could obtain "bridge loans" to finance down payments, says Neil Caron, vice president of retail production at Freedom Mortgage Corp. in South Windsor, Conn. Bridge loans were short-term loans to be repaid as soon as the borrower's first house was sold. Now, if sellers need the proceeds from the sale to use as a down payment, it's difficult, if not impossible, to find bridge financing, Caron says.
Another option is to use the proceeds of a home equity loan as a down payment, adds Charles Chedester, past president of the trade group Mortgage Professionals of Iowa. The caveat here is that sellers must apply for home equity credit before they list their homes for sale because lenders won't extend loans on properties up for sale.