How to Avoid Owning Two Homes at Once When You Move

When you decide to upgrade to a larger home, the process can feel exciting, but it also brings a unique set of challenges - one of the most stressful being the potential to own and to pay for two homes at once. Managing two mortgages, utility bills, and the overall stress of moving can be overwhelming. However, there are ways to avoid this situation. By planning carefully and making a strategic move, you can streamline the process and focus on your new dream home without the burden of owning two properties.

Here’s how you can avoid owning two homes at once when upgrading:

1. Sell Before You Buy

One of the simplest ways to avoid owning two homes is to sell your current home before buying a new one. This approach ensures that the proceeds from your sale go directly toward your new home purchase, preventing you from having two mortgages.

Though many people worry about finding a new home in time, there are strategies to ensure you have the time you need to find your new home, such as a post-settlement occupancy (formerly known as a “rent-back”) agreement. This option gives you flexibility to avoid rushing into a decision. A skilled real estate agent can help you orchestrate the terms of your sale contract to incorporate a flexible and unhurried timeframe for you.

Meredith Fogle from The List Realty explains, “A post-settlement occupancy agreement can be a lifesaver for homeowners upgrading. It offers peace of mind knowing you’ll have time to find your next home without the pressure of being without a place to stay.”

2. Consider Temporary Financing 

If you’re struggling to find the right home or want to purchase a new property before selling your current one, temporary financing like a bridge loan might be the solution. A bridge loan is a short-term loan that helps you cover the gap between purchasing your new home and selling your old one. This loan essentially acts as a temporary bridge, providing the cash you need to make a down payment on the new property without selling your current home first. 

Keep in mind that while a bridge loan can be helpful, it also comes with higher interest rates, so it’s important to carefully assess your financial situation and weigh the benefits against the cost. Many lenders offer loan re-casting as an alternative option, allowing you to put less money down on your new mortgage then recasting as a new product using the equity from your home once you close on your home sale.

3. Leverage Equity in Your Current Home

If you’ve built up equity in your current home, you might be able to use that equity for the down payment on your new home. A home equity loan or line of credit can give you the funds you need to make a competitive offer on your new property without having to wait for your current home to sell.

However, this option does come with its own set of risks, as it’s essentially borrowing against the value of your home. If your old home doesn’t sell as quickly as you hoped, you could find yourself in a difficult financial position. Always consult with your real estate agent or financial advisor to determine if this option is right for you.

4. Buy First, Sell Later (With Caution)

In some markets, you might be able to buy your new home before selling your old one, especially if you can comfortably afford to carry two mortgages for a period of time. However, this approach requires careful planning. It’s essential to understand your budget and ensure that you can manage both the mortgage on your current home and the new one without risking financial strain.

If you decide to go this route, be sure to work closely with a real estate agent who can help you find the right home in your price range and assist you in preparing and pricing your current home competitively to sell quickly.

5. Use Contingencies in Your Offer

In a competitive real estate market, it might seem impossible to avoid owning two homes at once, especially when the supply of homes is limited. One strategy to consider is including a contingency clause in your offer on a new home that depends on the sale of your current home. This way, you’re not legally bound to purchase a new property until you’ve sold your current one.

This option may limit your ability to make an offer on some homes, but it does provide a safety net if you’re worried about carrying two properties at once.

The seller home of choice contingency can also be an effective way to ensure you are able to find your new home with an option to cancel the contract for the sale of your property unilaterally. In a strong sellers’ market with low inventory, some buyers will agree to this contingency.

6. Rent Out Your Current Home

If you’re not ready to sell your current home but don’t want to carry two mortgages, renting out your property can be an option. Renting allows you to generate rental income while keeping your home for future resale. This approach could be ideal for homeowners who are confident in their ability to manage a rental property.

Before pursuing this route, consult with a property manager or real estate agent to determine the potential rental value of your home and to ensure that it’s a viable option in your current market.

Conclusion

Upgrading to a new home is exciting and can be a sound decision, but it’s important to avoid the stress and financial burden of owning two properties at once. Whether you sell first, use a temporary financing option, or carefully plan your finances, there are ways to ensure that your move to that new home is smooth and stress-free.

By taking a proactive approach, working with professionals like Meredith Fogle from The List Realty, and exploring all your options, you can upgrade without worrying about juggling two homes.