Selling your home and buying a new home-how does this work?

[Anonymous]

Please excuse this stupid question, but.....I am trying to sell my first home and want to buy another home and need to know what to expect. Assuming that you make money off of your home when you sell, do you normally use that money for both your downpayment AND closing costs or should I plan to have additional money saved up for closing costs as well?  Again this is assuming that I make money on the sell.  I'm just wondering what normally happens. 

[Anonymous]

There is no one answer.  Ideally, you can sell your home for enough to cover your down payment and closing costs on the new one.  Seeing how the whole market has dropped and buyers are expecting sellers to pay closing costs (or at least a good part of them) in most markets, we would need to know alot mroe info on your situation.  Is there enough equity in your current house to pay for the realtors fees, inspections, any needed repairs, and probably some closing costs assistance and then still have $ left?  Make sure you are being realistic with the value of your home and the expenses.  Expect to walk away with roughly 90-92% of the selling price of the home left over for you to apy off the mortgage and to put down on a new place.  The one good thing is that most sellers are willing to pay some or part of closing costs.

[Anonymous]

Most people cannot buy another home till the existing sells.  Often this will be the source of down payment (if you have equity) and/or you cannot affored/qualify for a simultaneous new/existing mortgage payment.  Some rent the original home if they can qualify, but that is a whole nother topic.

1.  Of course, your home needs to be listed.

2.  You most likely want to get your preapproval (they may provide contingency on the sale/pay off of exisint)

3.  You locate the new home you want.

4.  If the seller is willing, you can put a contract in place that has a contingency of sale for your current home, meaning you don't close if your home does not sell.  Of course the seller won't give unlimited time, but if you put earnest money down and they have had the home on the market for a while, there is a good chance they may give you some time.  All or a portion of the deposit/earnest money may be non-refundable if you fail to close, even with contingency.

There are a variety of circumstances and requirments from the lenders, the sellers, etc.  This is one possible scenario.

[Anonymous]

I don't think my question was clear.   I am not intending to have two mortgages.  I want to sell my home and then once it sells buy another one.  I already have my eye on a particular subdiv with new homes available.  I asked them about the contingency contract and they said that I would have to put money down of course and they would honor that price but they wouldn't hold it and they wouldn't put a "Under Contract" sign in the front.  This isn't really my idea of a contingency contract but I'm not very familiar with this process.

[medicgrrl]

Every situation is different.  Some people wait until they have a contract on their existing home before they put a contract on another.  You can have back to back closings with the same attorney so the funds are used for the new house.  As far as the builder, I had a similar situation years ago.  I put a contract on the house and the builder left the house on the market.  If he received another offer then I was given 24 hours to remove the contingency regarding the sale of my current home and provide him with an approval letter with both mortgages.  I was lucky enough to qualify with both payments when this happened.  The market was much different then and I happened to sell my house anyway prior to closing on the new home.  It really is going to come down to what you are comfortable with.  If there are a lot of homes available in this neighborhood and they aren't selling well then you may want to consider waiting until your house is under contract before you put a contract on a new house.