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Should You Buy A New Home Before Selling Your Old One

Performance Property Real Estate Question

Q: My wife got a new job out of state so we are going to sell our home and move. If we find the new home we want before we sell our current home, should we still buy it anyway? Steve, Passaic, NJ

A: Buying and selling a home is a personal financial decision that should be made based on your financial goals and your current financial condition/situation. Having a new home lined up can give you peace of mind when selling, and give you more flexibility to move out on your own time; however, signing a contract to buy a new home before you sell your current home certainly carries a risk. If you close on your new home before you close selling your current home, you will get stuck making two monthly mortgage payments instead of just one. One thing you can try to do to reduce your risk and hopefully still buy the new home you like is to make your purchase offer contingent on the sale of your current home (the seller may or may not agree to that). Another way to reduce your risk of getting stuck paying 2 mortgages at the same time is to choose a closing date on the contract to buy your new home many months into the future in order to give you more time to close on the sale of your current home (again, the seller may or may not agree to that). The safest or most certain way to make sure you won’t get stuck paying 2 mortgage at the same time is to wait until your current home is sold before entering into a contract to buy your new home but this will likely require you to find and pay for temporary housing before you close on the purchase to buy your new home. Thanks for your question, Steve.

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