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Sell first, buy first, or keep it?
Moving up? Run the same numbers through all three ways to get from this home to the next one and see what each one costs. The calculator compares; you decide.
Your current home
Your next home
Selling costs on your current home
Savings
Your down payment comes from the sale. The cost is the gap between closings.
Your three options
Same home, same next home, three ways to get there. Each card answers the same questions so you can compare them. None of them is the “right” one; that depends on you.
Sell first
Sell your home first, then use the money from the sale to buy the next one.
Out of your pocket at closing
$0
Your sale covers the $89,075 down payment and closing costs.
Extra cost of moving this way
$0
Nothing extra if both closings line up. If you’d need a rental in between, add it under “Sell first” above.
Your monthly housing cost after
$3,132/mo
Your new home payment, including taxes and insurance.
Cash left once your home sells
$40,807
After the down payment and closing costs.
Buy first
Buy the next home first, using a loan against your current home (a HELOC) for the down payment. Then sell.
Keep & rent
Keep your current home and rent it out. Buy the next one with your savings or a HELOC.
This is an estimate, not a quote, and not financial, tax, lending or legal advice. Rates, fees and loan terms come from your lender. Ask your CPA about taxes and your county appraisal district about homestead questions. References to TREC forms are for information and don’t replace your agent’s or an attorney’s review.
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Things to know in Texas
The 80% limit
A Texas home equity loan or HELOC, plus every other loan on your home, can’t add up to more than 80% of its market value (Texas Constitution, Art. XVI §50). Lenders may lend less.
Set the HELOC up before you list
Many lenders won’t open a HELOC on a home that’s already for sale. If buying first is the plan, talk to a lender before the sign goes up.
It takes about three weeks
A Texas home equity loan can’t close until 12 days after you apply or get the required notice, whichever is later. After closing you have 3 days to cancel, so the money comes after that.
One at a time, once a year
Only one home equity loan can be on your home at a time, and Texas allows one every 12 months. Each HELOC draw has to be at least $4,000.
Fees are capped
Fees on a Texas home equity loan are capped at 2% of the loan. Some costs, like the appraisal, survey, the lender’s title policy and discount points, don’t count toward that cap.
Renting it out ends the homestead exemption
The $140,000 school homestead exemption and the 10% yearly cap on taxable value only apply to your main home. Once you move out, tell the appraisal district in writing before May 1 of the first year the home no longer qualifies.
The 3-year window on a later sale
If you lived in the home at least 2 of the 5 years before you sell, you may be able to exclude up to $250,000 of gain ($500,000 married filing jointly). After you move out, that window closes about 3 years later. Depreciation from the rental years is taxed separately (IRS Pub. 523). Ask your CPA how this applies to you.
Staying after closing
A seller leaseback with TREC’s temporary lease (No. 15-7) covers up to 90 days after closing.
Another option: a contingent offer
TREC’s Addendum for Sale of Other Property by Buyer (No. 10-6) makes your purchase depend on selling your current home. The tradeoff: the seller can keep taking backup offers. If they accept one, they can ask you to drop the contingency on short notice or lose the house. There’s no math to run here; your agent can tell you how sellers are treating these right now.
Questions about moving up
Can I get a HELOC on a house I’m selling?
Many lenders won’t open one on a home that’s already listed for sale, since it’s about to be sold. If you want to buy first, set the HELOC up before you list.
How much can I borrow against my Texas home?
Texas caps a home equity loan or HELOC, plus every other loan on the home, at 80% of market value. A lender may lend less depending on your credit and income.
What happens to my homestead exemption if I rent out my old home?
It ends once the home isn’t your main residence. Your tax bill will likely go up, and the 10% cap on yearly increases goes away too. Your county appraisal district can confirm the numbers.