Buying a Home When You Already Own One

Mediterranean Home Exterior

Investing in real estate is very profitable if you know how to manage it and make the right decisions at the right time. Many people often want to buy another home while already owning one. This would translate to a potential additional mortgage and expense; not to forget the hassle which comes with it too!

That said, we think you should totally buy yourself another home if you want. Here is how you can go about it:

Buying and Selling at the Same Time

Many people want to buy a new home while already owning one. However, the additional mortgage scares them off. To save yourself from that trouble and to make it easier to receive a second mortgage, it is better that you sell your current house first. Selling the first home before buying the second one obviously has its pros and cons. Consider this:

  • If you sell your older home before buying the second one and you don’t have any other arrangements made, you may have to put away your stuff at the storage for some time and rent a place to live. This may take a while if getting the new place takes longer than you expected.
  • You can invest your home equity, which is a risky, but a possible way out. If the prices of the property increase while your equity loan is invested, you will be getting a much lesser return in the long run.
  • Selling first will give you a better chance to receive a second mortgage since you’d be clearing off the first one. Additionally, you will be saved from paying for two mortgages at the same time.

On the other hand, you have the option of buying first, something which has its own perks and disadvantages such as;

  • Buying a new home before selling the older one will give you time to make the move and adjust in the new place
  • Also, if you rent your older home while buying the second one, you will be able to save some money on the two mortgages you are liable to pay.

 

However, that of course does not eliminate the fact that you do have to pay two mortgages.

Rent Your First Home and Buy the Second One

If you rent out your current home and buy the second one, you will be able to have two real estate investments. In addition to that, you will also have a supportive income to help you with the mortgage payments of the second house. However, this is only a much more helpful idea if you have already cleared out the mortgage for the first home. Otherwise, you may have a hard time managing your finances between paying the two liabilities.

A Safe Investment

Go for a safer investment. Don’t invest your assets in something that might be volatile in the long run. Research the market trends and make a careful decision before you invest. For instance, if you are buying a vacation home while you already have a permanent residence, instead of buying a penthouse, go for a small and cozy apartment.

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