If your current home no longer fits your family’s needs, the months leading up to the new school year can be an ideal time to make a move. Whether you need additional bedrooms, a larger backyard, or more functional living space, upsizing during the summer gives you the opportunity to settle in before the first day of school.
One of the biggest questions many homeowners have, however, is how to afford the down payment on a larger home while still owning their current property. Fortunately, the home equity you’ve built over the years may provide the financial flexibility you need. But, if this is the first time you’ve considered this, you may not know where to begin.
In this blog, we’ll explain how to use your home equity toward a down payment, explore your financing options, and share tips to help make your move as smooth and stress-free as possible.
Why Summer Is the Perfect Time to Upsize Your Home
If you’ve been considering purchasing a new, larger home, you may wonder if summer is the right time for this move. Summer is a great time for upsizing your home for several reasons. This season is the busiest time of the year for home sellers, giving you more options to choose from than if you were trying to purchase during the colder winter months, especially in Utah.
Buying a home during the summer months also allows you plenty of time to get your children settled in their new space before the school year starts. While moving can be exciting for everyone, it isn’t uncommon for children to experience some stress around this experience. With a little extra time before school starts, they can get a little more comfortable in this space.
The days are also longer, giving you more time to unload your moving truck. These long days make moving days much smoother than if you’re working on incredibly limited time during the shorter winter days. Finally, with a move during the summer months, you get a chance to fully utilize your outdoor spaces, instead of waiting for temperatures to warm up.
How to Use Your Current Home Equity for a Down Payment
While you might want to purchase a new home, you may be worried about your limited down payment. Thankfully, you do have the option of using your home equity for a down payment on your new property. But how exactly do you do this? If you are considering using your home equity to purchase a new property, you have a few different options to consider:
Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) functions as a revolving line of credit secured by your property’s value. You can draw funds as needed to cover your down payment, providing financial flexibility. Because it acts as a junior lien, you can access this equity without refinancing your existing primary mortgage.
Cash-Out Refinance
If you want to use your current home equity to purchase a new property, you may want to consider a cash-out refinance. This will replace your current mortgage with a new, larger one, and you will take the difference between your old loan and the new loan in one lump sum cash-out payment.
Home Equity Loan
Similar to a cash-out refinance, you are provided with a lump sum of cash. However, this money acts as a second mortgage alongside your existing mortgage. It is a good option if you want to maintain your current low mortgage payment but need a set amount of money for a down payment.
Bridge Loan
If you are preparing to use your home equity as a down payment but haven’t found a buyer for your existing property, you can get a short-term loan designed to bridge the gap between purchasing your new home and selling your old one, providing you with essential flexibility while navigating this transitional period.
Sell Your Property
The safest way to use your home equity to purchase a new home is to include a home sale contingency in your purchase offer. This makes your new purchase conditional on the sale of your existing property, allowing the proceeds from the sale to go toward your next down payment.
Should You Buy Your New Home Before Selling Your Current One?
If you’ve been considering purchasing a new home for a while, you may be ready to take the plunge and begin the hunt. But, is it in your best interest to purchase a new home before selling your current one? The answer will depend on your circumstances. For some people, the risk of carrying two mortgages is too substantial, and it may not be right.
However, if this is something you can justifiably carry, there are several advantages to purchasing a new home before selling your current one. In this situation, you aren’t in a rush to find somewhere to live with the pressure of a looming sale. You also don’t have to worry about moving into temporary housing.
Finally, if you purchase before selling your current home, you don’t have to shuffle your belongings into storage before showing. Instead, you can move your furniture into your new home and show your home free of any clutter, which can lead to better offers. If you’re on the fence, it may be best to speak to your trusted real estate team about what they recommend.
Tips for a Smooth Move Before School Starts
Moving before the school year begins can help your family settle into a new routine without the added stress of changing schools mid-semester. Once you’ve closed on your new home, creating a moving plan can make the transition much more manageable. Breaking the process into smaller tasks helps you stay organized and reduces last-minute surprises.
Consider these simple tips for a smoother move:
- Schedule movers as early as possible.
- Pack non-essential items several weeks in advance.
- Update your address with schools, banks, and service providers.
- Label boxes by room to make unpacking easier.
- Set aside an essentials box with clothes, toiletries, and important documents.
Planning ahead gives you more time to focus on helping your family adjust and enjoy your new home before the first day of school arrives.
Let Us Help You Find Your New Home
Whether you want to use your home equity to purchase a new home or you’re just starting your hunt for your first home, our team at Premier Utah Real Estate is here and ready to help. We’ve been helping buyers find their perfect home across the Tooele area and beyond for over 25 years, and we’re confident that we can do the same for you. In a market as competitive as Northern Utah’s, you want to ensure you’re partnering with an experienced team, and that’s exactly what you get when you partner with us.
If you would like to learn more about how our team can help you get into your dream home, don’t hesitate to contact us today.
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