More Follow up Questions buying and selling simultaneously

There is some prep work for buying and selling simultaneously,  start getting ready for both as soon as you can. The more you plan, the more it will save you from making big mistakes.

"The preapproval process for all borrowers should really start before they jump in and begin house hunting," I can not say this loud enough a great lender can get you dialed in to all of the nuances of this process sooner rather than later!

When selling your home, you likely will use the proceeds to pay off the mortgage and then apply any remaining money toward the next property.

But until that sale closes, you'll need to come up with money for a down payment and have financing set up to buy the next home. See earlier blog for more options and explenations.

You could use a home equity line of credit, or HELOC, on your current home to draw cash for the down payment. But you'll need to have the HELOC already in place; a lender won't approve the credit line after you've put your house on the market, Blonder says.

Don't wait until the last minute to apply if you think you might use a HELOC someday to finance the next purchase. Smith says sometimes a line of credit can take longer for approval than a first mortgage.

Bridge loan

With a bridge loan you can borrow up to 80% of your home's value to pay off the old mortgage and put any remaining money toward a down payment on another home. Or you can use a bridge loan as a second mortgage to borrow a portion of your home equity for a down payment.

You make interest-only payments on the loan, and the maximum term is typically a year. But usually, bridge loans are paid off much more quickly because they're designed to fill that short gap between the old-house sale and new-house purchase.

Because the term is short, interest rates are a couple of percentage points higher on a bridge loan than for a regular mortgage.

Some applicants who get approved for bridge loans don't even need to use them because the sale ends up closing before the purchase after all.

401(k) or other investment account loan

You can borrow against a retirement or other investment account to get money for a down payment. A 401(k) loan, for instance, lets you borrow up to half the balance or up to $50,000, whichever is less, at reasonable interest rates.

The upside to borrowing against an investment account is that lenders don't count that loan as debt when calculating your debt-to-income ratio for a mortgage preapproval, Blonder says. Ideally, you'll repay the loan against your investment account as soon as your home sells.

Make sure you stick with your plan to repay the loan after the old house sells and resist the temptation to use the money for other things. Defaulting on a loan from a 401(k) account can trigger taxes and penalties.

Angela Peters, The Home Girl, Keeping it...real estate,

Thanks to Barbara Marquand for the great article!