How to buy a second home while keeping the first and not paying for two mortgages?

Question

I currently live in my parents' house for which I am making the mortgage payments (as a kind of rent). But I would like to buy my own house and move out, and my parents don't want to sell their house. So we agreed to rent it out to someone else.

Given this scenario, my question is related to timing because I want to avoid having to pay the monthly mortgages for two houses. So I don't want to put down an offer for my new house until I have found tenants for my old house. But most tenants it seems are looking to move in within a month. And from offer to closing on the new house will probably take longer than that right?

So when I advertise my current house, how far out should I put the availability date?

Given that I still have not even made an offer on the new house. If I put it too near, the new house might not be ready for me to move in, and if I put it too far, then I scare of perspective tenants.

Answer 1

You're taking a risk no matter when you list the rental as available, unless you can be somewhere else in case anything goes wrong with your timelines.

That said, you typically close 30-45 days from contract date, 45 seems most common. Many rental agreements require 30 or 60 days advance notice before moveout. So, listing your rental 60 days ahead of available date isn't too early, but I think 30-day notice is more common, so might not have as much interest 60-days out.

One thing that helps your timelines, is that when you buy a house, typically your first mortgage payment is due one full month after the end of the month you close, so you can potentially go quite a while before your first mortgage payment (ie, if you close on the 15th of July, your first payment would typically be September 1).

Answer 2

There's no trick to this, you're going to have to do the best you can and might need to plan to overlap a bit. If you think you can rent out the current place quickly you'll have an easier time.

Keep in mind mortgages are paid in arrears, and rent is paid in advance, so technically you could get away with it if you close on, say, August 1 and your new tenants start on September 1. In other words, in this scenario your first mortgage payment and their first rent payment would be due on about the same day.