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It’s tempting to bargain hunt for a home in today’s buyers market.  The times when a seller would get an offer before their “for sale” sign was pounded into the front yard is, for the moment, a thing of the past.  This leaves many homeowners to decide whether to grab their dream home at a bargain price before or after they sell their current home.

A bridge loan used to be the first thought to cross most people’s minds when they considered two mortgages.  In today’s market many homeowners do not have as much equity in their homes so a bridge loan may no longer be a viable option.  Homeowners without equity do have a couple alternatives:

• VA Loans – Veterans & active members of the military have a great, no down payment loan option available to them.  If you’re a former or current military service member and have found the perfect home at the perfect price, consider putting zero down for it and taking out a VA loan for the full purchase price.  Once your old home sells, apply any proceeds to the principal of the new loan.
• Rent your old home – Rather than carrying the full burden of two mortgage payments, treat your current home as an investment property by renting it.  Becoming a landlord comes with new responsibilities, however it also features many benefits.  You’ll be able to keep your property as it appreciates, the tax-breaks you receive could offset your income tax on your rent and your rent income can help cover mortgage, taxes and insurance payments.

The bottom line: it’s usually better to sell first in softer market conditions.  Once you’ve closed the sale, you should still have plenty of good deals to choose from.  If you decide that you can’t wait to buy a new house because you want to take advantage of today’s record low mortgage rates – it’s good to know that there are options out there for you.

Like most home questions, each situation is unique and should be evaluated on a case-by-case basis.  Your Home Loan Expert can help you determine which options are best for your situation.

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