Whether you've outgrown your starter home or are just looking to upgrade, you're now in the market for your second home. Since you've been through the home-buying process before, you know what to expect, right? Still, there are some considerations unique to second-time homebuyers you'll want to be aware of when shopping for your next home.
Sell your home first (if possible)
Even if you live in a hot neighborhood, where homes are selling within days of being listed, there are always unknowns when trying to sell your home. If you don't want to risk the chance of paying two mortgages for an unknown amount of time, wait until your current home is listed to start looking, and don't put an offer in on a home until you have an agreement of sale on your current home and the buyers have received their financing approval.
Selling your current home also takes away the impact of your first mortgage on your debt-to-income ration when trying to qualify for a second home mortgage. This can have an effect on how much lenders will give you to purchase your next home.
Avoid buying more than you can afford
Second time buyers can get still swept up in the thought of their dream home, regardless of whether or not they can actually afford it. Reassess your budget and make sure you can handle mortgage payments, plus additional funds to repair, decorate or renovate the property.
Also, take the down payment in to consideration. If you're not selling your first home and using the profit from the sale as a down payment, you'll want to aim for 20 percent down to avoid private mortgage insurance fees.
Think about selling (again)
You may think to yourself, "Now that I have enough space, I'm never moving again!" Unfortunately, none of us know what the future brings, and it's always a good idea to be aware of the potential resale value of your second home.
Citywide Home Loans makes the loan process simple. Visit www.citywidehomeloans.com/ to see how much home you can afford and find a loan program that's right for you.