Buying a second home can present some unique challenges and opportunities. However many homes you have bought, nevertheless how good the team you work with, there are some conditions of the process that will increase your stress level.
Some challenges all buyers will have to face, and this also includes those buying a home for the second time. A good example is when there is a lack of accessible homes, that the market is very competitive for the person interested in buying. Second-time buyers can have some advantage when it comes to a easy-moving market. This is because they are seasoned house hunters who are able to spot problems more easily and also have more confidence when it comes to decision making.
However, people buying a home for the second time will also face some unique difficulties. Below are some great tips that will help buying a second home.
The first thing we need to acknowledge is saving up for the funds to close can also hard for new homebuyers. There was a survey recently done by the National Association of Realtors displaying that 13 percent of consumers think that saving the down-payment is the most difficult part of the home buying process. Second-time homebuyers are at a little disadvantage because they are not able to dive into an IRA penalty free because it is only withdrawn for first-time buyers. Life also becomes more complicated with time, making it harder to save consistently.
What is the best thing to do? The highest obvious (which is the hardest in implementing) is using a spending plan or budget.
Budgets usually get a lousy rep, the excellent starting point is to build up your savings by having a good plan for your intake and outgoing funds. Try automating good management as great as possible: apps such as Digit and Betterment have made it easier to set up monthly withdrawal from your bank account. Also, it is a great plan to save money from items such as tax refunds, lottery winnings, bonuses, and rewarding outcomes from a night out in the casinos.
A option of boosting your saving for cash to close is by selling your first home. This can be the right path to take when you are able to supervise the timing of your sale and the purchase of the home.
In the immaculate situation, you will sell your current home and seamlessly buy the next one. You do need to stress about the transaction crumbling just due to the buyer was not able to qualify for a loan or pulled out of the deal at the final second. Unfortunately, this is the world and everything is unpredictable, and the first home sale might not go as you planned. There is a risk of paying for two mortgages next month, which can be hard for many people to grasp.
How can I avoid such a scenario? The best course of action is timing the sale of your primary home first (this is not just getting a contract, but to complete the entire process till closing). The present strategy will address the doubtfulness, but you will also need to work with the planning of finding a place where you can stay at when looking for a home.
If you don’t see this as the right option for you, then start thinking about increasing your emergency account so that you can handle both mortgages. The extra you have saved, the better the position you are into holding up for the best offer (alternately having to go with a bad offer because you don’t have any more money to make the mortgage payments)
Timing to sell your home is a double edge sword. If it doesn’t happen as fast you had planned, you end up paying for both mortgages. If you sell the home too quick it can backfire, primarily if you don’t have any options or places to stay.
One way of managing timing is making the sell of your home contingent on funding on your newest home. If the buyer of your first home fails in purchasing it, you have a way to get out of your new home purchase contract. This can seem like you are getting the best deal of both, but you will be putting a purchaser of your current home at an unfair advantage. With a market full of homes to select from, buyers might not be pleased working with such contingency, making it a good idea to talk with a realtor so you can know the risks involved.
You should always have a backup plan, even if there is no risk of losing your new home without getting the second. You should take your time and think about other alternatives, like renting a completely furnished home or apartment, talking to a purchaser who might be interested in renting you your old home for a few months or even moving in with friends or family. This means you will have options if the unforeseen happens.
Most people know the stress that comes with moving once they have their new home, and it is the most stressful thing. Moving is always challenging, disruptive, and hectic. There are some arguments to be had about moving within homes, being tougher than moving when in an apartment. This is because there is more to load, and the more choices you have to make. Also, the time frame to do so is tight.
The solution is starting to prep early. This will involve decluttering a house well before you put it on the market. Go to each room and toss out anything that you have not touched in the past years. The garage and the attic should also be checked because that is where you will find boxes of things you haven’t used for many years. Toys, clothes, books, and other items in good shape can be donated or sold. You should be looking for ways of lightening the load before you make your big move.
Prodigy Lending is a DBA of AmCap Mortgage, Ltd. (NMLS ID# 129122 – www.nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/129122), an Equal Housing Lender.
Managing RMLO: Jason Turner (NMLS #286357)