Many homeowners have to sell their homes to buy a new house. This can cause financial uncertainty. If the timing is not right, you could miss out on the home you've always wanted.

Timing is another challenge when you are trying to sell and buy simultaneously. For example, a homeowner might need to sell their home and move for work. If this is the case, it's often difficult to settle down before starting your new job. It might be that you have children or are in a position where it is not the most convenient option to move into temporary housing while you settle into your new home.

To avoid additional costs, delays and reduce the burden of two mortgage payments, it is best to wait for your home to sell before buying a new one. However, life can be difficult, and you may have to sell your home simultaneously. Here are some ways to get around it if it is.

Buy With A Settlement And Sale Contingency

You may choose to offer a settlement and sale contingency depending on current market conditions. However, your offer for a new home will be contingent upon the sale and closing of your existing house.

A contingent offer will eliminate the need to have two mortgages. Your monthly debt will disappear when you close on your new loan.

Buyers do have some issues with contingent offers. First, they are less attractive for sellers than traditional, non-contingent deals, which sellers consider more likely to close.

Sellers might not accept a contingent sale because of other buyers refusing to make non-contingent offers on homes that are "under contract." This could result in the seller having to find a backup buyer if the contingent offer is rejected.

You can still make other offers even if the seller accepts your contingent offer. However, you will have a time limit (generally 24-48hrs) to accept a new offer, and then you can drop your contingency.

Bridge Loans

A bridge loan is a great option if you want to bridge the gap between selling and buying.

Bridge loans are short-term loans that can temporarily finance your downpayment while you wait for your home to be sold. Your existing home secures this type of loan as collateral.

Bridge loans offer sellers flexibility, but they also come with risks. All lenders do not offer these types of loans. However, if you do get one, be ready to repay it quickly. The typical repayment time for bridge loans is six months. This is much faster than traditional loan types. Although it is not common, lenders can extend it up to three years.

Uncertainty around loan terms can make repayments more difficult. The repayment terms will vary depending on which bridge loan you choose. There are two options: make monthly payments more often or pay a lump sum upfront.

This loan type is one of the riskiest. You could face serious consequences if your house doesn't sell. You will still need to repay the bridge loan according to the terms of the buyer withdrawing or canceling the sale. If you are unable to pay the loan, the lender can foreclose your home.

Bridge loans are not without risks. It is difficult to even qualify for one. Bridge loans are more expensive than home equity loans and have lower fees and interest rates. Because bridge loans are high-risk, lenders want applicants with higher credit scores.

Bridge loans require you to be eligible for the second mortgage, make the payments and pay the interest. This can prove to be a major financial burden, especially if you don't get offers on the house you are selling.

Home Equity Loans And HELOCs

Home equity loans or home equity lines of credit can offer the same benefits as bridge loans but less risk. HELOCs are different types of loans. They have a fixed interest rate and pay a lump sum. Home equity loans, on the other hand, allow you to access funds when you need them.

These financing options, like bridge loans, are secured against your home as collateral. However, they borrow against your home's equity and have a higher interest rate than bridge loans. These long-term loans typically have repayment terms between 5 and 20 years.

Don't be fooled by lower interest rates or longer repayment terms. Both home equity loans and HELOCs come with risk. For example, if your home does not sell, you may end up paying several lump sums of money each month. These could include your original mortgage, the mortgage on your new house, and the payment for your home equity loan.

Not all homeowners qualify. To be eligible for a loan, you must have sufficient equity in your home. For more information, talk to a lender.

Renting Your House

You could become a landlord to rent out your house if you can pay the down payment on your new home. Even though the monthly rental income may not be enough to cover the full mortgage payment, it could still be a financial benefit. You could also consider renting your house on a nightly basis to a service like Airbnb if you cannot find a long-term, stable renter for your property.

Renting out your home offers flexibility. It can provide short-term financing to pay your mortgage until you move into your new home or are ready to sell. It could even be a great way of making extra income on an ongoing basis. However, you should check that your home insurance policy, mortgage loan, or HOA rules prohibit you from renting the property.

Discuss your situation with a mortgage professional and a lender before you buy.