How to Buy a Future Home and Sell an Existing One at the Same Time

Selling your home can be stressful under any circumstances, but especially when you are simultaneously trying to buy a new house. If the thought of buying and selling at the same time keeps you up at night, you’re not alone. 51% of sellers say it’s stressful to time the sale of their old home with the purchase of a new one, according to the 2019 Zillow Group Consumer Housing Trends Report.

At Town and Country Bank and Peoples Prosperity Bank, our Mortgage Services team consists of dependable, local mortgage professionals with years of experience assisting homebuyers in Central Illinois and the Metro East. In this article, we share our best tips for how to sell and buy at the same time, including for those planning to build a new home.

Selling or Buying/Building: Which to Prioritize?

While it’s hard to time different real estate transactions perfectly, what is most in your control is the process of selling your current home. Start by scheduling a meeting with a few different listing agents to hear their thoughts and recommendations and choose the one you feel most comfortable with. Your listing agent may also be able to provide an estimate of the average time it takes to sell a house like yours in your current real estate market. That will give you a sense of how much time you have to find a new home. And of course, you can always start looking online to get a sense of what’s out there.

On the other hand, if you’re building a new home, you may want to wait to sell your current home until your new one is complete. Timing this can also get tricky--you need a place to live while your new home is under construction, but it can be expensive to make payments on a construction loan while covering your regular expenses, too. 

The Bottom Line

Carefully schedule when your old home will be sold against when you close on your new home or when construction is completed. You don't want to miscalculate this and sell your old home too soon, leaving you with no place to live until construction is finished. Be sure to consult with the contractor to ensure that your construction will be completed on schedule and base your home sale around this. If money is a concern, a bridge loan and/or construction loan with interest-only payments could help. More on that next!

What is a bridge loan and how do they work?

As the name implies, a bridge loan helps you cross from one situation to another. So, a homeowner in need of cash could use a bridge loan to purchase or build a new house while waiting to sell their current house. Once the current home sells, the proceeds would generally be used to pay back the bridge loan.

Use a bridge loan to secure extra funding during the transition from one home to another. This way, you aren't using up any of your emergency savings to cover any costs that may arise through the process.

As an alternative to a bridge loan, you could tap into the equity you have in your current home (if applicable) and use a Home Equity Loan or line of credit to fund your new home purchase or construction.

What is a construction loan?

Construction loans provide short-term financing to cover the costs of purchasing land and/or building a new house from the ground up. To make a construction loan more affordable, you may be able to make interest-only payments during the construction process, then pay off the loan after you sell your current house, once the new house is complete.

More tips for buying or building and selling at the same time

• Consider using a single real estate agent for both selling and buying. Working with just one person instead of two could streamline the process and minimize the risk of missing a piece of critical information.
• If you do end up buying a new home before your old one is sold, you can rent out the purchased house to cover expenses.
• Stay on budget both with selling your current home and building or buying your new home. Do as much as possible to minimize extra costs that arise during the construction process.

Contact our lenders today to learn more about bridge and construction loans!

Locally owned and operated, at Town and Country Bank and Peoples Prosperity Bank, we treat our clients like family. Our team of local and knowledgeable mortgage lenders can help you find the ideal loan for your situation, whether that’s refinancing, building, buying, or remodeling. Our branch locations include Springfield, Buffalo, Jacksonville, Lincoln, Decatur, Mt. Zion, Bloomington, Edwardsville, Fairview Heights, and Quincy. If you’re interested in a bridge or construction loan, don’t hesitate to contact us with questions. Request a consultation with our mortgage team today!