For the second time home buyers....

Some of my conversations with second time home buyers start off with uncertainty of where they should begin.  Particularly the ones who currently still own their first home.  While some buyers know their plan and just want my assistance making it happen, others want to consider different options.  The most important factors to consider when making your decision about what to do with your current home are affordability and how comfortable you as the buyer feel.

There are a couple scenarios that you can do with your current home.  Of course, you could sell it.  The obvious benefit of selling your home would be that hopefully you will get net proceeds from it.  That would provide you with a nice down payment for your new home purchase.  The downside is you either have to coordinate a same day settlement with your new purchase, which may or may not be an easy task, or find intermediate housing while you are continuing your home search or waiting for your new home to be built (in the case of new construction).

Another scenario would be converting your home to a rental.  We outlined what is needed to do that in a previous post.  Click here to review.  Of course, the benefit of converting your home to a rental is rental income.  We have had clients who chose to refinance prior to converting their home to a rental due to the real estate market conditions.  There are some downsides to this as well, not everybody wants to be a landlord.  It is important that you can make an educated decision specific for your situation.

Mortgage insurance (PMI) is another topic that I have found second time buyers are more concerned about than their first time around.  If you are not selling your current home, or getting net proceeds from the sale of the home, it is a good idea to save for your downpayment.  Having at least 20% to put down will allow you to avoid being locked into PMI fees.  If having 20% down is not an option, there are lender paid mortgage insurance options that are available .

One thing that I hope there is no uncertainty about is making sure you qualify to purchase a new home before you make plans to sell or rent your current home.  I strongly suggest that you speak with a lender about your plan and become pre-approved for that plan, whether that plan is selling, or renting, or lender paid PMI..  We can provide estimates for each scenario that you are thinking about doing so you can feel confident in your decision.

Please contact us with any questions about purchasing.  We would be happy to help guide you through the mortgage process for the first or the second time around.