I agree with the comments before my answer. Either wait until you home is sold or better yet, make a contingent offer on your upleg property.
Robert M. van der Goes
If possible, I would sell, and rent back for a month or so until you are able to purchase your new home.
I wouldn't take the risk of having two mortgages - six months goes pretty quickly!
Hope it helps, and good luck!
So while you may sell less than you would like, you would be buying at an optimal time, thus getting a great deal.
Hope this helps.
Base on your post, it sounded like you already located a potential home for your move-up, and you are concerning about opportunity costs for passing the chance to get that dream home vs. the burden of paying two mortgages during the transition. Here couple of options for you to consider.
1. Just go ahead and buy. This is simple for now, but it will be painful after few months of paying both mortgages.
2. Offer to purchase with contigency of selling existing house. This may be a safe option for you, but it could be a big yellow flag to the seller. Those sellers may see this contigency as weakness of the buyer and may not accept your offer.
3. Offer to purchase and convert the existing house to rental. If after 3-4 months and you still could not sell the previous house, you may want to convert it to rental to offer the mortgage payment. Depending on your current mortgage, your month cash flow (or negatively cash flow) would vary.
Hope it helps!
National Brokers - connecting people to homes
If you don't want to hang onto it for more than a year or two, need the money from the sale to purchase your bigger home, you will probably get the most for it now depending on where it is located.
While you may be able to swing two mortgages for half a year, I wouldn't recommend it unless the average days on market for homes selling in your area is much less than that. Either find your dream home now, make the offer contingent on concurrent closings and price yours agressively to attract a buyer quickly, or work on selling your home and then start looking once you have a buyer.
Wouldn't you rather use that chunk of money on new furniture or upgrades for your new home instead of paying a mortgage on something you aren't living in?
If you want to purchase a Bigger, Better, Nicer home? Do it RIGHT NOW. You are in a down market use it to your advantage. There are sellers out their who will have no problem with contingencies especially if yours is already in Escrow. You will have to make sure you are priced to sell, be the best in the area, in your tract on your street. The other alternative is to rent it, be your own Landlord or ask a Management company to help. This will be less of a headache for you. Management Companies will charge between 6 - 10% of the monthly rent - to be the Landlord for you. Instead of you paying for two mortgages why not have someone else pay it for you. Sal, get out there and buy yourself that Bigger - Better - Nicer and probably cheaper home in this down market. I have had many a client who rented out their property wanting to sell at a later date but ended up keeping it, they were actually getting positive cash flow from their rental.
Good luck Sal- I hope it all works smoothly for you.
I would sell before I buy. You can rent in between. I assume you know that when you have a larger home, you not only have a larger mortgage, but larger insurance premiums, tax bills (this can be huge thanks to Prop 13), pool bills, landscape maintainance bills, housecleaning bills, utilities and so on. Right? It's also much harder to find your glasses or cell when you laid them down. lol
Of course, in OC, $1.4M isn't all that large these days. So first, I would do what dames do--window shop. For homes. That way, you'll know a really good deal when you see it. Avoid OC's most common epidemic--Fear and Greed Syndrome. Don't ever fall in love with a house.
If you can "probably afford" two mortgages, you might think of renting your existing home out. If there is a problem with the rental payment, you're covered. But don't rely on a renter to protect you from bankruptcy.
I'm not you, but if I were, I would window shop for a year, meanwhile selling my home.
I can't imagine as a seller in a buyers market taking a roulette shoot on 1.4 million and risk loosing both properties. The market it extremely volitale and you will need the to interview several listing agents to get a reality check on your local market, pricing and marketing strategies to get your home to sell quickly.
Be careful getting advice from sales people. Although their motives may be well intentioned they are probably somewhat biased.
Speak to your CPA about the ramifications financially to you IF you don't sell your home in 6 months and will be liable for two mortgages.
Being house poor is not only financially stressful, but hurts the entire family mentally, physically and spiritually. The bigger nicer home will not overcome the burdens of major financial debt.
Best of luck,
There will be plenty of homes on the market when you are ready to buy and you should not have a problem locating the next home of your dreams once your current home is in escrow.
I hope this information helps Sal. If I can be of further assistance, please don't hesitate to contact me directly.
Real Estate Broker & Lawyer