Should you buy a new house before you sell your current one? The main advantage is that you know where and when you are going before you have to leave your current house. The main disadvantage – what do you do about the money that you’ll need to buy the new one? Some advice:
You may be able to rent out your first house as a temporary measure. Often, however a homeowner who buys a new house before selling the old one has to get a bridge loan (a loan that bridges the time gap between the closing of the two houses) The interest rate on bridge loans is fairly high (a little above the mortgage but under the prime rate) they’re usually due at maturity (generally 90 days) and are renewable. Some banks also charge a lien on one or both houses involved in the bridge loan.
If you want to avoid getting a bridge loan, consult your Rea1tor about other financial arrangements that can be made.