Can I buy a new house before selling my current house?
"You can make a contingent offer: ""I will buy this house if I sell my own.""  In a highly competitive environment, contingent offers tend to be ignored. (Another commentator described such a contingency clause as synonymous with ""Please Reject Me"".) You can get a bridge loan: you borrow money for a short term, at punishingly high interest.  If your house doesn't sell, you're fscked. You pay for two mortgages (or even buy the other house for cash).  If you can afford this, congratulations on, you know, being super-rich. Or you can do what I am doing: selling one house and then living at my mom's until I buy another one.  (You will have to stay at your own mom's house; my mom's house will be full, of course.) Edit: A commentator with the disturbingly Kafkaesque name of ""R."" made the not-unreasonable suggestion that you buy both and rent out one or the other.  Consider this possibility, but remember: On the other hand, if the stars align, you might not want to extricate yourself.  If the tenant is paying the mortgage and a little more, you have an appreciating asset, and one you can borrow against.  With a little work and a little judicious use of leverage, doing this over and over, you can accumulate a string of income-producing rental properties." The two most common scenarios are: Since you have more control of timing when you are the buyer compared to when you are the seller, #1 is probably more common, however, a good real estate attorney should be able to walk you through your options should #2 come up. Fortunately, many real estate attorneys do not charge you anything until the sale completes, and you will likely get a discount if you involve them in both the sale and purchase, so I would start by finding an attorney. A bridge loan (or bridging loan) is designed for exactly this circumstance. They're short-term loans (6 months is common) designed to help home-buyers to bridge the gap between buying and selling. MoneySupermarket defines them like this: Bridging loans are designed to help people complete the purchase of a property before selling their existing home by offering them short-term access to money at a high-rate of interest. As well as helping home-movers when there is a gap between the sale and completion dates in a chain, this type of loan can also help someone planning to sell-on quickly after renovating a home, or help someone buying at auction. Interest rates are very high, and there are likely to be fees, because you'll only need the loan for a short period. Here are some links to Canadian websites that explain more. If you can qualify for two mortgages, this is certainly possible.  For this you can talk to a banker. However, most people do not qualify for two mortgages so they go a different route.  They make offers on a new home with a contingency to sell the existing home.  A good Realtor will walk you through this and any possible side effects. Keep in mind that the more contingencies in an offer the less attractive that offer is to sellers.  This is how cash buyers can get a better deal (no contingencies and a very fast close).  Given the hotness of your market a seller might reject your offer as opposed to first time home buyer that does not need to sell an old home.  On the other hand, they may see your contingency as low risk as the market is so hot.   This is why you probably need a really good agent.  They can frame the contingency in a very positive light. There's also the option to put most of your stuff into storage and rent an apartment or go to an extended stay hotel.  Some apartments have month-by-month options at a higher rate, though you may need to ask around.   I've known some people to use this as their primary plan because it was easier for them to keep the house clean and ready to show when it's empty.  Basically, this option is to sell your current house then buy the new house with a (hopefully fairly short) transition time in the middle. As the other answers suggest, there are a number of ways of going about it and the correct one will be dependent on your situation (amount of equity in your current house, cashflow primarily, amount of time between purchase and sale). If you have a fair amount of equity (for example, $50K mortgage remaining on a house valued at $300K), I'll propose an option that's similar to bridge financing: Place an offer on your new house. Use some of your equity as part of the down payment (eg, $130K). Use some more of your equity as a cash buffer to allow you pay two mortgages in between the purchase and the sale (eg, $30K). The way this would be executed is that your existing mortgage would be discharged and replaced with larger mortgage. The proceeds of that mortgage would be split between the down payment and cash as you desire. Between the closing of your purchase and the closing of your sale, you'll be paying two mortgages and you'll be responsible for two properties. Not fun, but your cash buffer is there to sustain you through this. When the sale of your new home closes, you'll be breaking the mortgage on that house. When you get the proceeds of the sale, it would be a good time to use any lump sum/prepayment privileges you have on the mortgage of the new house.  You'll be paying legal fees for each transaction and penalties for each mortgage you break. However, the interest rates will be lower than bridge financing. For this reason, this approach will likely be cheaper than bridge financing only if the time between the closing of the two deals is fairly long (eg, at least 6 months), and the penalties for breaking mortgages are reasonable (eg, 3 months interest). You would need the help of a good mortgage broker and a good lawyer, but you would also have to do your own due diligence - remember that brokers receive a commission for each mortgage they sell. If you won't have any problems selling your current house quickly, bridge financing is likely a better deal. If you need to hold on to it for a while because you need to fix things up or it will be harder to sell, you can consider this approach. If you're living in a market where some houses are going for $150K over asking, then you MUST buy before you sell.  In a seller's market, you will get multiple offers on your current house when you decide to sell, it will sell for (well) over asking, and you can dictate possession dates.  You do not need to worry about selling your own home, if you have a competent realtor. But buying a home is an entirely different story.  You may struggle to find something affordable, and there may be multiple buyers each time you decide to make an offer.  You may go through this cycle several times over many months before your offer  is accepted.  You should do this while living in your own home, with the comfort of knowing that you can sell your own home easily at any time, instead of the stress of an imminent closing date on your own home.  Or worse, move into rented space or Malvolio's mom's house for months or a year while the market increases by 15% and the houses in your old area are now selling for $100K more than you sold for.  Ouch, now you really can't afford to buy what you want, and you may end up buying something equivalent to what you used to own, for more, plus legal, realtor, and land transfer costs. If the closing dates don't align, then bridge.  This will only end up costing a few hundred dollars, less than $1K including legal fees (the lawyer will also charge to handle this).  But by buying before you sell, you'll easily make up that difference. This advice only applies to hot property markets.  I'm not a realtor, just a guy living in the GTA who went through this process last year.  Lost out on three offers over 10 months, then bought for asking price on fourth offer (very fortunate), then sold for $90K over asking, then bridged for 2 months.  My realtor is awesome and made the process as stress free as it can be.   Get a good realtor, start house hunting while preparing your own house for sale, and enjoy the process.  Also you should negotiate with your realtor, they may be willing to reduce their commission on your sale if they are also representing you on the purchase. Good luck! P.S. Do not make a contingent offer, and do not accept one.  Get your financing in place before you make an offer, and if you are concerned about inspection, you can also do that before the offer, if you act quickly.  The inspection will cost ~$500, but it will increase the value of your offer by much more than that since you will be going in without conditions.  I spent ~$1,000 on two property inspections on homes I lost out on, and I don't regret it.  That is the cost of doing business. The other offers on the home I eventually bought were for significantly more than my offer, but they had conditions.  I saved at least $40K by being condition free, and I only spent $1,500 on three property inspections.  And, some people will just drop out of the multiple offer scenario when they learn that one of the buyers has done an inspection. You don't say why you want to move. Without knowing that, it is hard to recommend a course of action. Anyway... The sequence of events for an ECONOMICAL outcome in a strong market is as follows: (1) You begin looking for a new house (2) You rent storage and put large items into storage (3) You rent an apartment and move into the apartment (4) The house now being empty you can easily do any major cleaning and renovations needed to sell it (5) You sell the house (and keep looking for a new house while you do so). Since the house is empty it will sell a lot more easily than if you are in it. (6) You invest the money you get from selling the house (7) You liquidate your investment and buy the new house that you find. If you are lucky, the market will have declined in the meantime and you will get a good deal on the new house in addition to the money you made on your investment. (8) You move your stuff out of storage into the new house. There are other possibilities that involve losing a lot of money. The sequence of events above will make money for you, possibly a LOT of money. I sold my house and had been in the market looking for a replacement house for over 6 months after I sold it. I found someone willing to give me a short term, 3 month lease, with a month to month after that, at an equitable rate, as renters were scarcer than buyers.By the time I found a house, there were bidding wars as surplus had declined (can be caused seasonally), and it was quite difficult to get my new house. However, appraisers help this to a degree because whatever the seller wants, is not necessarily what they get, even if you offer it. I offered $10k over asking just to get picked out of the large group bidding on the house. Once the appraisal came in at $10k below my offer, I was able to buy the house at what I expected. Of course I had to be prepared if it came in higher, but I did my homework and knew pretty much what the house was worth. The mortgage is the same as the lease I had, the house is only 10 years' old and has a 1 year warranty on large items that could go wrong. In the 3 months I've been in the house, I have gained nearly $8k in equity....and will have a tax writeoff of about $19,000 off an income off a salary of $72,000, giving me taxable income of $53,000... making by tax liability go down about $4600. If I am claiming 0 dependents I will get back about $5,000 this year versus breaking even.
As an investment, the trend doesn't really matter, what matters is the price which you buy the house, and the price at which you sell.  Say you buy a house for $250k today.  In general, it doesn't matter if the house is worth $200k or $300k tomorrow (neglecting things like refinancing and home equity loans).  What matters is the price when you sell.  The longer you plan to stay, the less the current market conditions mean. Of course there is a lot more that goes into the decision to buy a house, since you are going to live in it. You also need to take into account things like how long you plan on staying in the area, the stability of your job, and future family size. Interest rates do generally affect house prices but other factors do too, especially the unemployment rate. However, everything else being equal, when interest rates drop, it makes the borrowing of money cheaper so tends to stimulate the economy and the housing market, increasing the demand for houses and generally causes house prices to increase (especially if the supply of new housing doesn't increase with the demand). When interest rates go up the opposite happens. Usually interest rates go down in order to stimulate  a slowing economy and interest rates go up to slow down an overheated economy. Regarding your situation you are able to get a 30 year fixed rate at today’s interest rates (in Australia the longest fixed rate you can get is for 10 years and the rate is usually 1 or 2 percent higher than the standard variable rate. Most people here go for the variable rate or a fixed rate of between 1 to 3 years). This means that even if rates do go up in the future you won't be paying a higher rate, which is a positive for you. You are buying the house to live in so as long as you can keep making the repayments you should not be too worried if the price of the house drops sometime in the future, because if your house has dropped and you want to sell to buy another house to live in, then that house would have also dropped relative to yours (give or take). So your main worry is that rates will go up causing both house prices to fall and unemployment to rise, and you yourself losing your job and eventually your house. It is a risk, but what you need to consider is if you can manage that risk. Firstly, I believe rates won't be going up in the US for a number of years, and if and when they do start going up they will most probably start going up slowly. So you have some time on your side. Secondly, what can you do between now and when interest rates do start going up in a few years: Try to put more saving away to increase your safety net from 6 months to 12 months or more, or make extra repayments into your home loan so that you are ahead if things do go wrong. If you are worried that you could lose your job, what can you do to reduce your chances of losing your job or increasing your chances of getting a new job quickly if you do lose it? Improve your current skills, get new skills, become an invaluable employee, or look at possible opportunities to start your own business. Do your own research on the types of houses you are looking at buying, the more houses you look at the better prepared you will be when the right house at the right price comes along, and the less chance that you will be rushed into buying what might be an overpriced house. So to sum it up; do as much research as you can, have an understanding of what your risks are and how you are going to manage those risks. Peace of mind is the key to your question. Just before the US housing bust of 2007, I had someone try to convince me to take all the equity from my house which was overvalued in an overheated market. The idea was to put that money in the stock market for a bigger return than the interest on the house. Many people did that and found themselves out of jobs as the economy crashed. Unfortunately, they couldn't sell their homes because they owed more than they were worth. I never lost a night of sleep over the money I didn't make in the stock market. I did manage to trade up to a house twice the size by buying another when the housing market bottomed out, but waiting for a market recovery to sell the smaller house. The outcome of my good fortune is a very nice house with no mortgage worth about 1/3 of my total net worth. That's probably a larger percentage than most money managers would recommend, but it is steadily decreasing because now, all the money that would go to a mortgage payment instead gets deposited in retirement accounts, and it still has 30 years to grow before I start drawing it down. I almost don't remember the burden of a mortgage hanging over my head each month. Almost. "If I have a house that its market value went from $100k to $140k can I get HELOC $40K? Maybe - the amount that you can borrow depends on the market value of the house, so if you already have $100k borrowed against it, it will be tough to borrow another $40k without paying a higher interest rate, since there is a real risk that the value will decrease and you will be underwater.   Can I again ask for HELOC after I finish the renovation in order to do more renovation and maybe try to end up renovating the house so its value raises up to $500k? I doubt you can just ""renovate"" a house and increase its market value from $140k to $500K.  Much of a house's value is determined by its location, and you can quickly outgrow a neighborhood.  If you put $360k in improvements in a neighborhood where other homes are selling for $140k you will not realize nearly that amount in actual market value.  People that buy $500k houses generally want to be in an area where other homes are worth around the same amount.   If you want to to a major renovation (such as an addition) I would instead shop around for a Home Improvement Loan.  The main difference is that you can use the expected value of the house after improvements to determine the loan balance, instead of using the current value. Once the renovations are complete, you roll it and the existing mortgage into a new mortgage, which will likely be cheaper than a mortgage + HELOC. The problem is that the cost of the improvements is generally more than the increase in market value.  It also helps you make a wise decision, versus taking out a $40k HELOC and spending it all on renovations, only to find out that the increase in market value is only $10k and you're now underwater. So in your case, talk to a contractor to plan out what you want to do, which will tell you how much it will cost.  Then talk to a realtor to determine what the market value with those improvements will be, which will tell you how much you can borrow.  It's highly likely that you will need to pay some out-of-pocket to make up the difference, but it depends on what the improvements are and what comparable homes sell for." "We initially attempted to do this when we bought our house and found the listing agents ""resistant"" to say the least.  For a variety of reasons (not just the commission), we ultimately decided to hire a buyer's agent, but we focused on buyer's agents that would pass some of their commission back to us.  We used Redfin, but I think there may be others now. One ""gotcha"" even on this, is that, if you're getting a mortgage, the mortgage company may also have something to say about this situation.  We had to apply the agent's rebate to our closing costs, we could not take it away in cash." That really depends on the lender, and in the current climate this is extremely unlikely. In the past it was possible to get a loan which is higher than the value of the house (deposit considered), usually on the basis that the buyer is going to improve the property (extend, renovate, etc.) and this increase the value of the property. Responsible lenders required some evidence of the plans to do this, but less responsible ones simply seem to have given the money. Here in the UK this was often based on the assumption that property value tends to rise relatively quickly anyway so a seemingly-reasonable addition to the loan on top of the current value of the property will quickly be covered. That meant that indeed some people have been able to get a loan which is higher than the cost of the purchase, even without concrete plans to actively increase the value of the property. Today the situation is quite different, lenders are a lot more careful and I can't see this happening. All that aside - had it been possible, is it a good idea? I find it difficult to come up with a blanket rule, it really depends on many factors -  On the one hand  mortgage interest rates tend to be significantly lower than shorter term interest rates and from that point of view, it makes sense, right?! However - they are usually very long term, often with limited ability to overpay, which means the interest will be paid over a longer period of time. "It's legal. That's what a home equity loan is, for example. More generally, what you're talking about is a ""second mortgage"". It has no effect on the primary mortgage that you've already made to your bank; they're still secured, and if you get foreclosed, they get paid, and only if there's something left over does the second mortgage holder get anything. That's why second mortgages are more risky than first mortgages, and why you might have trouble finding someone willing to do it." This is of course a perfectly normal thing to happen. People trade up to a bigger house every day. When you've found a bigger house you want to move to and a buyer for your existing one, you arrange 'closing dates' for both i.e. the date on which the sale actually happens. Usually you make them very close, either on the same day or with an overlap of a few weeks. You use the equity (i.e. the difference between the house value and the mortgage) in the old house as the down payment on the new house. You can't of course use the part of the old house that is mortgaged. If the day you buy the new and sell the old is the same, your banks and lawyers do everything for you on that day. If there is an overlap then you need something called 'bridge financing' to cover the period when you own two houses. Banks are used to doing this, and it's not really that expensive when you take into account all the other costs of moving house. Talk to them for details. As a side note, it is generally reckoned not to be worth buying a house if you only intended to live there one or two years. The costs involved in the process of buying, selling and moving usually outweigh any gains in house value. You may find yourself with a higher down payment if you rent for a year or two and save up a down payment for your 'bigger' house instead.