Buying before you sell: equity, contingencies, and the mortgage

Equity is the difference between what your home would sell for today and what you still owe. It decides which options are open to you, and many homeowners in Peotone, New Lenox, Frankfort, Manhattan, Beecher, and Wilmington are surprised to learn they have far more than they thought. A market analysis is the first step, and Nick's is free.

Some owners qualify for a bridge loan or home equity financing to carry the down payment on the next house until the current one closes. Others write an offer contingent on selling their existing home, which sellers accept more readily in a balanced market than a frantic one. And some simply sell first and negotiate a longer close or a short rent-back to buy time. Each has a cost and a risk; which one fits depends on your equity, your lender, and the market that month.

Homeowners ask whether they should pay off the loan before listing. In most cases, no. When the home sells, the mortgage is paid directly from the proceeds at closing. Using savings to pay it off early usually just moves cash you will want for moving costs and the next down payment into a house you are about to sell.

In most situations, yes. Knowing your home's value and the buyer demand for it lets you make a stronger offer on the next one, and it keeps you from falling for a house you cannot yet afford. Selling too early risks temporary housing; waiting too long risks missing the right house. Planning the timing of both deals before the listing goes live is most of the job.