Many people are in this dilemma. It is not as bad as you think. There are many ways you can over come this issue. Here are a list and some pros and cons on the subject.

A Contingency Sale

Basically, this is you going into contract for purchase with a "contingency" of selling your old home first. This sounds like a great idea but causes numerous issues. The fist thing you must be aware of is, it is easier to buy a home then it is to sell one. What if this is the home you really want but you aren't getting any bites on your home? You end up loosing the home. This gives an out for the seller, they can also place a stipulation that if they get another buyer, they can break the contract. Also the seller can demand more money for his/her home stating that they will have to wait for you. This can be costly. I would look to avoid this option.

Bridge Loan (Swing Loan)

A bridge loan sounds like a great idea, until you find out how much it is going to cost you. Basically, it is a temporary loan between the time you purchase your new home and the time you sell your old one. The bank will pay off your old mortgage and lend you the down payment for the new home, you don't pay a dime towards the bridge loan until you have sold the old home. At that time, you pay off the bridge loan with interest. In this case you need to be mindful of the interest rates. Don't forget that the fees associated with taking a bridge loan, closing costs, title searches, etc... I remember looking into it when we where purchase a new home, looked like it was more trouble then it was worth. But this option is better then a home equity loan because you can defer paying the it until you sell off your own home.

Home Equity (Like a Bridge Loan)

Now lets take a look at some constructive financing, You own the home and have a some equity built into it from the recent home spike across the nation in the past years or you paid down on the home. Let's say your home is worth $500,000 and you owe $250,000. The new home cost $400,000 and you need 10% down ($40,000) to get you in. Since you have 50% cushion you current loan, you can apply for a home equity loan or line of credit. You are borrowing against you current home and now you owe $290,000. Your current monthly payments are low since you do not owe much or you purchased the home a long time ago for much less then it is worth now. Can you care both loans for a short period of time in the current market? Caring it for perhaps 6 months or more. If so, it is less hassle and cost to acquire a home equity loan then going through a bridge loan. But, watch out for the interest rates and don't think you can't bargain for the rate either. The other side of this coin is, have you already a buyer for your home? In which case you may only need to care the loan for a short period of time, perhaps 1-2 months. In either case, keep in mind to price your old home correctly and remember every month you hold on to your old home, you are making month mortgage payments & tax payments.

Timing!

This is the best case scenario if you can do it out and it is a little nerve racking. You find a buyer for your home and you have a new home under contract. You time the closings on the same day but different times. The closing on your old home earlier in the day and the closing on your new home later in the day. Be sure to allot a decent amount of time for any issues that may arise, like walk through issues. Also make sure to keep in contact with your lender for any paper work issues. Mortgage companies are notorious for last minute problems.