March 24, 2021

Buy Before You Sell in Montgomery County: Your Options

Kevin Grolig breaks down how Montgomery County homeowners can purchase a new home before selling, from bridge loans to loan recasting.

You buy a new home before selling your current one by locking down two things first: a mortgage pre-approval that shows you can carry both properties, and a source of cash for your down payment that doesn’t depend on your home sale closing first. From there it’s a sequencing game. You get your current home appraisal-ready while you shop, you close on the new place, you move, and then you sell the old one on your timeline instead of a buyer’s timeline. I want to be upfront about something first, though: a purchase contingent on selling your current home is not realistic in today’s market. You’re either all in on buying first, or you’re selling first. There’s no in-between anymore. If buying first is even something you’re willing to consider, keep reading, because it’s more doable than most homeowners assume.

Can I actually afford to buy before I sell?

Yes, and the only way to know for sure is a mortgage pre-approval conversation with a lender. Before anything else moves forward, you need a lender to run your debt-to-income ratio and tell you whether you qualify for a new mortgage while still holding your existing one. With interest rates as low as they’ve been, I’ve seen plenty of homeowners get approved for both loans at once who assumed there was no way that would happen. If your lender comes back and says you can’t carry both, that’s your answer: buying first isn’t your path, and selling first is. I cover that route in detail in my guide to selling: home selling guide.

Where does the down payment cash come from if my equity is still tied up?

It comes from one of four places: your retirement accounts, a gift from family, a bridge loan, or a HELOC. Most homeowners assume they need their home sale to close before they have access to a down payment, since their equity is sitting in the house. That’s true for a lot of people, but it’s not the only option. You can borrow against a 401k or thrift savings account and pay it back once your old home sells. You can accept a gift from a relative, as long as it’s documented as a gift, whether or not you two work out repayment privately. You can use a bridge loan, which is a short-term loan against your current home’s equity that gets paid off the moment you sell. And you can use an existing HELOC, or open a new one, though I’ll flag that a new HELOC can take a few months to originate, and some banks won’t allow you to use HELOC funds toward a new home purchase, so check with your bank first before you count on it. One more thing worth knowing: Compass offers a free six-month bridge loan for buyers going this route. Reach out to me if you want the details on how that works.

How do I know what my current home is actually worth before I list it?

You find out by bringing in a real estate professional to walk your home and give you a realistic number, not a guess from an app. Once you know you can qualify for the new mortgage and you’ve got the down payment sorted, the next step is getting a straight answer on what your current home will sell for and what you’ll actually net after the sale. A good agent should be able to tell you exactly what to fix, what to skip, and how to price it to sell fast and for top dollar. This step matters more than people think. You don’t want to be surprised by your net proceeds after you’ve already committed to a new mortgage payment. I always tell my clients: know the number before you need the number.

What should I do to my current home while I’m still living in it?

Start getting quotes and scheduling any repairs or updates now, before you find your new home. If your current place needs work, whether it’s cosmetic touch-ups or bigger repairs, the goal is to have it essentially market-ready by the time you close on the new house. That way there’s no scramble, no delay, and no reason your old home sits on the market longer than it needs to once you’ve moved out.

How do I find the right new home in this market?

You start the search with your realtor and a home search portal built around exactly what you need. Right now, inventory in Montgomery County is tight. In some parts of the county we’re seeing 70% less inventory than this same time last year. That’s exactly why getting your financing and cash sorted first matters so much. When the right home does hit the market, you need to be ready to move on it immediately, not scrambling to figure out if you can even afford it.

What happens to my old home once I’ve moved into the new one?

Your old home goes on the market, and if you’ve prepped it in advance, it should sell quickly and for top dollar. This is where all that early prep work pays off. You’ve already gotten repairs done, you’ve already got a realistic number from your agent, and you’re not selling under pressure because you’re not living in a home you’ve already left. That combination is exactly how you net the most money from the sale.

What do I do with the proceeds once my old home sells?

You use them to recast your new mortgage, which lowers your monthly payment without the cost of a refinance. This is the step most buyers don’t know exists. When you buy first, you often put down less than you’d like because your equity isn’t accessible yet. Once your old home sells, you can apply that money toward your new loan balance through a one-time recast. A recast is not a refinance: there’s no new loan, no new interest rate, and none of the extra fees that come with refinancing. It simply reduces your loan balance and lowers your payment while keeping your original rate and terms.

Here’s how that plays out on a $600,000 home. Say you buy with 5% down at 3% amortized over 30 years. Your down payment is $30,000, your loan amount is $570,000, and your principal and interest payment lands around $2,404 a month. Sixty days later, your old home sells and nets you $100,000, which you apply toward the new loan. Your balance drops to $470,000, your rate stays at 3% over 30 years, and your new payment comes out to $1,981. In that 60-day window, you bought a new home, sold your old one, eliminated that old mortgage, and cut your new payment by $423 a month, all while only carrying one month of double payments.

FAQ

Is buying before selling actually realistic in Montgomery County right now?

Yes, for the right buyer. With current interest rates and the equity most homeowners are sitting on, buying first is often more achievable than people expect, as long as you qualify for both mortgages and have a real plan for your down payment cash.

Is there any risk to buying before I sell?

There’s some risk, but it’s low if you’re working with a good agent and your expectations are set correctly from the start. Most of the risk comes from surprises: an unclear home value, an unexpected repair, or financing that falls through. All of that is avoidable with the right prep.

What’s the difference between a bridge loan and a HELOC?

A bridge loan is a short-term loan against your current home’s equity specifically meant to be paid off when you sell. A HELOC is a revolving line of credit against your equity that you may already have open, or would need to set up, which can take a few months and isn’t always approved for this use by every bank.

Do I need a home sale contingency to make this work?

No, and you actually can’t use one in today’s market. Buying first means going in without a contingency on your current home selling. That’s exactly why the pre-approval and down payment planning steps come first.

What if I find out I can’t qualify to buy first?

Then selling first is your path, and that’s a completely normal outcome. I walk through that entire process, including what to expect and how to time it, in my guide to selling: home selling guide.

If you’re weighing whether buying first makes sense for your situation, that’s exactly the kind of conversation worth having before you start touring homes. I can run your numbers, connect you with a lender, and map out what your timeline could realistically look like. Check out my full guide to buying here: home buying guide, or reach out any time: contact Kevin.

Ready to find out if you can buy before you sell? Book a free 30-minute call with me here.

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