Is The Time Right To Buy Another House

Is this the right time to buy another house? It’s a question many home owners and first time home buyers ask themselves.

Maybe I Should Wait For Better Conditions Before I Buy Another House

Maybe waiting for lower interest rates would be the right move. Hint: probably not. Buyers who thought about waiting for interest rates improve the last several years generally lost out. Only recently have rates improved some. Most Boulder home buyers who waited the last several years lost out on major appreciation.

Perhaps waiting for a massive influx of options is best in Boulder Colorado. Hint: not a winning strategy. Sure, inventory is up say from three years ago, but not dramatically. Nowhere near the levels we saw back in 2010-11-12. No, waiting for some imaginary massive increase in the numbers of homes for sale is not a good idea if you want to buy another house.

Creating a Down Payment to Buy Another House

Let’s say you don’t want to sell your existing home. There are a number of good reasons for this. Primarily, perhaps you want your existing condo or house as an investment property. That’s a smart long term savings strategy. Or, maybe you do want to sell but prefer to buy first, sell second. In either of these scenarios, how do you get the down payment?

You could borrow against the equity in your existing home. This is usually accomplished through a Home Equity Line of Credit. That’s a HELOC if you have ever seen the letters and wondered aloud, “what’s that mean?”

trails at coal creek neighborhood with mountain views in the background

Borrowing against your existing home with a HELOC is a great way to buy another house. While you will have a larger mortgage payment, it also allows you to put that hard earned equity to work.

Of course, just like any other home purchase, you might receive the down payment as a gift from a family member or friend. Don’t laugh – I’ve had clients receive significant down payment assistance from friends. Or you might elect to save the minimum required down payment yourself. Believe it or not, you can still put very little down on a new place when keeping your former house.

garage

This Is Not Necessarily a Second Home

Look, if you live in your Boulder Colorado home and are purchasing a condo in Vail, that might well be a second home with all sorts of financing rules. But, if you are moving making a local move, or even coming cross country with the good fortune to work from home, this is quite likely not a 2nd house. That makes a big difference on financing. It will give you more freedom to buy another house without being penalized on the financing.

Buying a primary residence usually requires less money down at better rates than purchasing a house that will be strictly an investment.

Needing More Space Can Mandate Your Next Move

It’s not uncommon to suddenly find your cars parked outside as your garage fills up. Maybe you’ll host a garage sale or visit Goodwill. Or perhaps the best move is to get another home that simply offers more storage solutions – say adding an unfinished basement or property with a big backyard where you could install a shed for storage.

Making Your Current House an Investment Before Trading Up

Now, here’s a great idea. The younger generations call this House Hacking. Why not rent your existing house. Either as one rental to single person or family for a year. Or as a room by room situation, renting your own room last as you transition to your new place.

House hacking is a really popular option with Generation Z and Millennial home buyers. It’s not for everybody, having so many roommates. Funny, older generations used to call this running a boarding house. Funny how a little repurposing of the name of something can make it so much more popular.

Making A Move and/or Buy Another House As You consolidate Your Relationship

Love. It makes us do crazy things. One not so crazy aspect of this: holding onto your previous places. Not out of fear you may be running back. LOL. No. Hold onto your past places while the two of you buy another house and you now have three places creating future equity and wealth. Long term, this can be a really smart financial investment. Of course, you likely will need to decide what to do with some of those decorations and beloved couches when you move in together.

USDA Loans and Home Buyer Assistance Programs

Even in Boulder, there are opportunities to buy a home with little or no money down. USDA loans work in parts of Boulder County. VA financing can be an excellent option, although the guidelines on total loans can make the city of Boulder out of reach financially. These loans require no money down.

Ananda Lantaff and Boulder Realtor Bob Gordon discuss down payment assistance program.

CHFA is another neat opportunity. And various lenders around town offer financing that let’s you skip the down payment and go directly to ownership.

Buying After Financial Disaster

Let’s face it. Sometimes everything that can go wrong does go wrong. When you lose your home to foreclosure or a short sale, this doesn’t mean you are never going to be able to buy another house. There are some extra requirements before you can move forward. Karen Highland explores what you need to know when purchasing after a foreclosure.

Buy Another Home in a 1031 Exchange

This is a really neat idea. I’ve had clients take advantage of the tax laws here. Basically a 1031 Tax Deferred Exchange allows you to sell one piece of real estate and acquire something new, all without incurring any tax losses.

What my clients found was they had inherited some primo farm land. In another state. First off, they didn’t want to be farmers. Nor, secondly, did they want to move away from Boulder. So, selling the land was a must. Fortunately for these particular clients, the farm was already being leased and that particular farmer wanted to buy the land from my clients.

Maybe you are running out of bookshelf space. That could be the reason to buy another house around Boulder!

Meanwhile, these clients really wanted to live near the Boulder Country Club. So, they wound up doing a 1031. They sold the farm to the nearby farmer and purchased a primo Boulder house in Gunbarrel. There was a catch. Per the 1031, the house had to be non owner occupied for the first year. So, after closing they rented the house. And then at the one year and one day mark, converted the rental to an owner occupied home getting to make their dream move.

BTW, as this example shows, you don’t have to buy and sell the exact same sort of real estate. Here, it was a farm for a house. It could be a condo exchanged to buy another house. Or it might be one place sold and two purchased. So long as you stay within the rules, there are lots of options.

Reverse Home Mortgage Creates Conditions To Buy Another House

You know, another way to get into a different home is with a Reverse Mortgage. These loans sometimes get a bad rep on late night television ads. The truth is, a reverse mortgage can be a good solution for staying in your existing home or making a move to your new dream home for whatever reason — be it health, financial or emotional.

Using this strategy is ideal if you are on a fixed income and want to make a change and then stay in your house as a forever house. Talk to a trusted financial advisor if considering this route. Or give me a shout to discuss the pros and cons of doing a reverse home mortgage.

Many Reasons To Buy Now

This blog looked at a number of reasons why you might want to buy another house. You may want to hold your existing house when doing so. You could also sell your house as you purchase your new house. That’s really the most common outcome.

I’m Bob Gordon, Boulder Realtor. I’m here to help you with your home buying and home selling needs. Give me a shout to discuss your current market needs and thank you for visiting my blog Boulder Real Estate News.

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