If you want to move to a new home but have not yet sold the one you live in, should you go ahead and buy another one before selling the one you currently own? If you are trying to determine what you should do in this situation, there are several factors you should consider before making your decision.
Can you afford two payments?
The number one question to ask yourself is whether you could afford to pay two mortgage payments at the same time. If the answer is no, then you probably should not buy another house until you sell yours. If you think you can manage to pay both payments for a while, then buying another house now would probably be okay for your situation.
Do you have money for a down payment?
The second factor to consider is the down payment needed for the new house. Do you have money in your bank account to use for a down payment on a new house, or will you be relying on the profit from the sale of your old house to use as your down payment?
If you do not have money for a down payment, you could still buy another house if you can find a loan that requires no money down. This is always an option, especially for people with excellent credit; however, there are consequences of buying a house with 0% down. The main consequence is paying for private mortgage insurance (PMI). This is typically a necessity for anyone that puts less than 20% down on a house.
Could you handle being a landlord?
If you take the risk of buying another house before selling your own, you may end up experiencing trouble selling your old house. In this situation, you would either have to leave the house vacant for months or years while it is for sale, or you could decide to rent it out.
Renting out a vacant house is a great way to help pay the mortgage on a house, but this would mean that you would be a landlord. You would be responsible for creating a lease, collecting rent, and fixing things that break. Being a landlord is a huge responsibility, and it is not something everyone can do.
If you would like to learn more about buying or selling a home, you can contact a real estate agent and companies like Cast Line Properties LLC for more assistance.