How to Buy a New Home Before Selling Your Current One in Michigan

In my 25 years as a mortgage lender in Metro Detroit, the “Catch-22” of real estate has remained the same: Do you buy first and risk carrying two mortgages, or sell first and risk having nowhere to live?

In today’s market—from the historic streets of Royal Oak to the suburbs of Novi and Clarkston—sellers will occasionally accept home sale contingencies, but if your offer is tied to the sale of your current home, you’re in a weak negotiating position before it even begins.

As a Certified Divorce Lending Professional (CDLP) and a lender at Ross Mortgage, I specialize in solving complex equity puzzles. That is why our partnership with HomeLight’s Buy Before You Sell (BBYS) program is a gamechanger for my clients. It transforms you from a “contingent buyer” into a “power buyer.”, but it isn’t for everyone!

How the Program Works: The Mechanics of a Modern Trade-In

Think of this as a tech-enabled bridge that removes the friction of a traditional move. Here is the step-by-step breakdown:

1. The Equity Unlock & Guaranteed Backup

First, we evaluate your current Michigan home. HomeLight doesn’t just use an algorithm; they look at real-world data and your Realtor’s expertise.

The Unlock: They approve a portion of your equity (typically up to 70%) to be used as an interest-free down payment loan to be used towards the purchase of your new home. Equity is the difference between the home’s value and the balance of your mortgage plus any home equity financing like a HELOC.
The Safety Net: HomeLight provides a Guaranteed Backup Contract. They agree to buy your home at a pre-set price, almost always less than market value, if it doesn’t sell on the open market within 120 days.

2. The Non-Contingent Offer

Armed with that unlocked cash and a guaranteed sale, you can now make an offer on your next home in Ann Arbor, Birmingham, or anywhere in the state without a home sale contingency. This can put your offer at the top of the pile, and combined with Ross Mortgage’s Guaranteed Pre-Approval, you’ll be competing directly with cash buyers.

3. The “One-Move” Transition

You close on the new home, get your keys, and move in once. You avoid the “double move” nightmare, the cost of a temporary rental, the stress of living in a home that’s constantly being shown to strangers, or God forbid living with family temporarily.

4. Maximizing Your Sale

Once you’ve moved out of your old home, your agent can stage it and list it on the open market. You have 120 days to get the highest possible price. When it sells, you pay off your old mortgage, the interest-free equity loan you used to buy your new home, and the program fee. The remaining profit is 100% yours.

The Strategic Balance: Pros and Cons

The Benefits

Winning the Bid: You eliminate the #1 reason offers get rejected in Michigan right now, besides being outbid.
DTI Optimization: Because of the guaranteed backup contract is a cash offer, I can often exclude your departing mortgage payment from your debt-to-income (DTI) ratio. This can be vital for move-up buyers or clients navigating a divorce.
Staging for Success: A vacant home is easier to show and often commands a higher sales price than one cluttered with daily life.

The Downfalls

The Service Fee: There is a flat fee, usually 2.4% of the sale price of your departing home. This is why I say it’s not for everyone. 2.4% can be a lot of money depending on the sale price and some, even most, may not want to give that up and attempt to purchase with a sales contingency. You can think of the fee as the “convenience and certainty tax.”
Equity Requirements: You generally need ~30% equity in your current home for the math to work. If you bought your home a handful of years ago with a low-down payment, you may not have the equity position yet qualify for this program.
Short-Term Carry: You are still responsible for the mortgage payment including taxes and insurance on two homes until the departing one closes.
Conventional Loans Only: Fannie Mae is the only agency that has guidelines that address the impact of other real estate owned when the current primary residence is pending sale, therefore if you are using an FHA, VA, or USDA home loan to purchase your new home, you will not eligible for HomeLight’s Buy Before You Sell Program, unless you switched your financing to conventional.

Real-Life Example: The Metro Detroit Move-Up

Let’s look at a scenario I recently analyzed for a family moving from a colonial in Canton to a larger home in Northville.

The Scenario:

Current Home Value: $450,000
Current Mortgage: $250,000
Estimated Equity: $200,000

The HomeLight Solution:

Equity Unlock: We unlocked $120,000 for their down payment on the Northville home.
The Purchase: They found a perfect home for $650,000. Because they had no contingency, their offer was accepted over three others.
The Transition: They moved into the Northville house comfortably. Their Canton home was professionally staged and sold three weeks later for $465,000.

The Result: After paying the 2.4% fee ($11,160) and repaying the interest-free unlock, they walked away with a clean move and significantly more profit than they would have made in a rushed, “contingent” sale.

Is This Right for You?

Whether you are a first-time move-up buyer, have owned several homes, or are navigating a complex divorce settlement, the HomeLight Buy Before You Sell program is one of the most powerful tools in our arsenal at Ross Mortgage.

Ready to see your “Unlock” number? Reach out to me today. With 25 years of experience in the Michigan market, I’ll run the numbers and show you exactly how we can make your next move non-contingent and stress-free.