Congratulations! You’re under contract for a new home. There’s just one problem: your current home hasn’t sold—and closing day is coming up fast. What to do? Here are a few options to consider when you’ve purchased a home but still haven’t sold your old home.
Take out a bridge loan (or swing loan)
Ask your mortgage lender about whether your old home has enough equity to qualify for a bridge loan, short-term financing intended to help you bridge the gap from one house to the next. Interest rates for these loans are often higher than average market rates, but assuming that you won’t need it for long, and that proceeds from your current home will pay back the full amount, a bridge loan could be a worthwhile move that helps facilitate a smooth financial transition. Just bear in mind that not all lenders offer this type of loan, and that you’ll have to meet certain criteria in order to qualify.
Rent your old home
If you can rent out your home for more than your monthly mortgage payment, it could be a nifty way to turn a profit. Even if the rent won’t cover the full cost of your old home’s monthly expenses, it’ll at least defray some dual-home expenses until you’re in a position to sell.
Lower your selling price
If you’re having trouble selling your old home, your real estate agent may suggest lowering the price. That can be hard to do if you strongly believe you’d be selling yourself short, but consider that paying two mortgage payments for an indefinite period of time could equal a greater amount of money than whatever extra profit you’ll get from holding out for a higher selling price.
If you have your eye on a resale home but haven’t yet put in an offer, you could see if the sellers will agree to a contingency offer—in which the seller gives you exclusive rights on their home for a specified period of time without obligating you to purchase the property right away. This setup gives you leeway to sell your old home before moving forward with a contract on the new home, so that you’re not juggling multiple addresses. In a seller’s market, where you’re competing with a number of other motivated buyers, sellers may be less inclined to agree to such terms.
We hope these ideas help you in your new home transition. For more tips on selling your home, check out our Checklist for Putting Your Home on the Market.