Are You a Move-Up Buyer? What You Need to Know

You may recall a sense of relief as your first-time home-buying strategies brought you success. Moving up to a second home requires you to navigate a new set of challenges. As you make the rounds of Atlanta homes for sale, you must update your home-buying strategy to avoid personal and financial disruption.

Our real estate agents have helped many Atlanta families sell their current home and buy another. We can explain your options, but ultimately, you must make the choice that's right for you.

Buying Before You Sell

If you find a must-have home before selling your current house, be prepared for some hurdles.

• Mortgage difficulties
  Mortgage companies look at the numbers: income, credit, debt-to-income ratio. The fact that you have a large existing debt may temporarily rule you out as mortgage-worthy. If the company does approve you, it could be at a higher interest rate.
  
  
• Pressure to sell
  Selling your home enhances your mortgage prospects and frees up your equity for home-buying costs. But if you sell low just to make a fast getaway, you may have financial regrets for years to come.
  
  
• Two mortgages plus
  When you qualify for a second mortgage, you'll have more than two house payments. You'll have two insurance policies, two tax bills, two repair and maintenance budgets. You'll have double everything until a new owner takes over your financial responsibilities.

Selling Before You Buy

It makes sense to eliminate your biggest debt before taking on another. You'll free up equity, improve your finances, and make your mortgage approval process easier. You may still encounter complications.

• Homebuying Competition
  In a seller's market, you might not find a home right away. When you do, you may feel pressured to overpay to beat out the competition.
  
  
• Temporary "Homelessness"
  If you don't find a replacement home right away, you may have to endure the inconvenience of a "homeless" lifestyle. You won't be on the street, of course, but short-term rentals and storage units can become annoying very quickly.

The Market Is a Critical Factor

Whether you buy first, sell first or somehow manage a simultaneous closing, the local real estate market should be a key factor in your decision-making process.

• A Seller's Market
  In a seller's market, your existing home should sell and close quickly. Your equity will give you a cash reserve and your reduced debt load will ease the mortgage approval process.
  
  A seller's market can also result in low home inventories. You may have to search a long time to find the right home. When you do, you may lose out to another buyer if you don't negotiate a deal immediately.
  
  
• A Buyer's Market
  In a buyer's market, it's easier to find and buy your next home, but your current home may remain unsold far longer than you anticipate. If you're approved for a second mortgage and move forward with the purchase, you may have a two-mortgages-plus burden indefinitely.

Solutions

There are a few ways to minimize buying versus selling complications.

• Rent-Back Agreement - A negotiated agreement to extend your residency after you sell your home.
• Contingency Agreement - A home sale where closing is contingent upon selling your first home.
• Bridge Loans - A short-term loan to help you buy your new home. You pay off the balance after you sell your first home.

Let Us Help

There are many details to consider when you're transitioning from one home to another. Our real estate professionals can help. Contact us when you're ready to buy or sell a home and need the help of an Atlanta real estate professional.