How to Balance Your Budget While Buying and Selling a Home
Purchasing a home while simultaneously selling an old home is a significant task. Not only does it require attention to timing, but it can also prove expensive. You’re still paying expenses associated with your old home, but you’re also making a down payment and purchasing items for the new place. If you don’t pay attention to balancing your budget, you could end up in serious trouble with your finances.
Determine What Is Affordable
Part of the problem is that many people leap into this decision without creating a budget for themselves. By the time they realize that affording the process is impossible, they already owe money to multiple entities. Sit down with your partner to figure out what you can afford. When the numbers aren’t working out how you want them to, considering alternate living arrangements or opting for a new home that comes with a lower price can help you. Cutting back means you have to adjust your goals, but doing so will prove worthwhile in the long term.
Stay True to Your Price
When you receive an offer on a home, especially one that you’ve struggled to sell, you might want to accept it immediately. Keep in mind, however, that accepting an offer too far beneath your asking price can have consequences. The budget that you planned out at the beginning of the process may no longer apply. Work to stay as close to your asking price as possible. If you do receive a tempting offer, ask if it is worth it enough to sacrifice other financial comforts or security.
Opt for a Third Place to Live
Handling money when in between places is difficult because you are often paying for two homes at the same time. Seeing if you can live somewhere else during that time period can alleviate some of the financial stress. For example, you may find that renting a small apartment allows you to save more money than remaining responsible for your mortgage. Also, many people choose to move in with their family members while they look for a house, so you can see if relatives are willing to allow you to stay with them for awhile. This plan also gives you more time to look so that you don’t feel as stressed.
In order to sell your house quickly and efficiently, your real estate agent may have suggested that you make some renovations to your house. Part of the trouble here is that renovations cost you money. Also, you do not have a guarantee that you will see those funds returned. Take your time with deciding what renovations to choose. You should look into houses that recently sold in the area to gain a better sense of what sellers want. Then, you can use that information to make appropriate judgments about renovations.
Obtain a Loan
When you are really struggling to afford this process, look into taking out a loan. Make sure that you budget for the loan. Also, if you take out a loan to help with the costs of moving, you may receive approval for a lesser amount when it comes to buying the house. On the other hand, if you were already approved for a mortgage on the house, the loan amount for which you are approved may be lower. Obtaining a personal loan and a mortgage at the same time is possible, but you do have to consider the possible approval amounts.
Try a Bridge Loan
A bridge loan is another possibility that you can consider. This loan helps you to stay financially stable while you are bridging from one home to the next. These loans usually do not extend beyond a year, and in most cases, the amount of time for these loans is shorter.
Buying and selling a home is a process that both drains you of funds and brings you in money. While you are trying to balance the two, make sure that you have a plan so you don’t find yourself in financial trouble.