Problem:
Solution 1:
Solution 2:
Issues to consider:
Problem:
Conventional bank unwilling to lend enough money to purchase target house based upon not enough of a cash down payment and homeowner not qualified to carry two mortgages.
Solution 1:
Sell current home and purchase desired house.
Solution 2:
Borrow money from an alternative lending company willing to lend enough to purchase target house and cross collateralize on both houses
Does it Makes Sense to Buy a New House before Selling the Old One?
Issues to consider:
* The potential hassle of having to move twice if current home is purchased and target house not closed simaltaneously.
* The costs of moving twice with moving expenses, rental of temporary housing, and storage of belongings.
* Losing on the target house due to delay in selling current house.
* In a rising real estate market, the incremental loss of the difference in appreciation of a more expensive target house.
* The costs of obtaining a private loan and carrying two houses until the old house sells.
* Tax benefit of carrying two houses versus selling house and renting until target house is purchased
* Months to get old house fixed up in order to maximize sale of old house.
* Private loan costs more upfront, but you lose appreciation while searching for a new home.
* If it takes a long time to sell the old house and search for a new home, this could add substantially to the costs.