You have a new place to live. Other times, people get so intense about paying off their consumer debt—things like credit cards, student loans and car payments—that they sell their house to make it happen. They use their equity to pay off all their debt, and they rent while saving up a down payment to buy another house. There are lots of ways selling your home can improve your financial situation, and that’s a great reason to sell. But if selling your house would make your financial situation worse—either by sinking you further into debt or drastically increasing your payments—stay put. Keep this in mind too: With interest rates getting crazy high over the last couple of years, buying a new house and getting a new mortgage will likely stick you with a higher interest rate—potentially twice as high. Even if you’re downsizing, double-check that your budget can absorb that extra blow. Before packing your bags and heading out the door of your house, you should make sure you have a new place to live. But here’s the deal: You shouldn’t buy a new house before selling the one you currently live in. If it takes longer than you expect for your current home to sell, doubling up on mortgage payments will make your budget way too tight. Plus, qualifying for a new mortgage could be tricky when you’ve already got one outstanding. Luckily, there are plenty of great options to bridge the gap when you’re buying and selling at the same time, so you don’t wind up with two house payments at once. You could rent on a short-term lease, or you could move in with family for a little bit. Other options include a rent-back agreement (you give whoever buys your home a discount so you can live in it a little longer) and a contract contingency (you make the purchase of your new home contingent on the sale of your old one).
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