3 Ways to Buy Your New Home When You Need to Sell Your Current, and How Loan Recasting Can Help?

Do you have to sell your current home in order to purchase your next property? If you need to use the equity in your current home as a down payment for your next, or you can’t hold two mortgages at the same time financially – this is called having a Home Sale Contingency, and there are a lot of people in this position!

We have 3 great strategies that will not only help you successfully buy and sell simultaneously, but also protect you during the process in this competitive market.


1 – Put a ‘Home Sale Contingency’ in your offer

You can make an offer on a home with a Home Sale Contingency. We highly recommend not making an offer until your current home is on the market, and ideally under contract. That plays two-fold into our next strategy.


2 – Add a ‘Seller Home of Choice Contingency’ when listing your home

Step 1: We list your home and we let every interested buyer know that you need at least 30-60 days to find your home of choice.

Step 2: This would protect you as the seller and make the buyer aware that you need to find your next home in order for them to purchase your current home.

Step 3: If you didn’t go under contract on your next home during those 30-60 days, there are several routes that could be taken. A) you could mutually agree to extend the contract for the sale of your home, or B) you could terminate the contract with little to no consequence as the seller and stay in your current residence.

This is a great way in this fast moving market to be able to have some time to find your next house while also giving your buyer comfort that they’ve locked down the house they want in a competitive market.


3 – Enter into a Rent Back agreement

A rent back agreement is when a seller remains in the property for an extended period of time, ranging from a few days up to 90 days.

How would this work? We would list and sell your house as normal, so that you have the funds to purchase your next home. As part of your buyer contract, we put a rent back agreement in place which allows you to “rent” your home back from the buyer until you settle on your next home. That gives you time as the seller to find your next home, but you also risk not finding your next home within that rent back period. However, you would have a place to stay (at least short term!) and funds from your home sale to ensure you can make a non-contingent offer.


Another strategy relating to buying and selling simultaneously that lenders have, specifically, in today’s market –  is the ability to recast loans. We have clients that are looking to purchase their next home before selling their current one, who can afford both at the same time. Once they settle on their next home, they quickly sell their current home. This allows them to take the equity from their home sale and apply it to the principal of the loan on their new home. Then the lender does a loan ‘recasting,’ which is almost like a refinance but in a shortened amount of time without all the closing costs of obtaining an entirely new loan.


These are some of the most common strategies that we use to help clients purchase their next home contingent on selling their current home, and how recasting your loan may be an option as well if you have the financial ability to be non-contingent.

As always, feel free to check out our Facebook page – Elisabeth Yeager Homes & Farms Group or email me at [email protected] any time with any questions you may have. I’m always happy to answer!