Author Topic: Buying new home while also selling current, questions  (Read 1102 times)

dandypandys

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Buying new home while also selling current, questions
« on: June 21, 2018, 03:27:30 PM »
So, I have a paid off condo, worth 114k on zillow. I just saw a great house, but am not quite 100% in the correct position.. as i dont have enough downpayment cash. The house is 265k, but I only have 30k free, the rest is in a 403b and ira traditional and the condo.
I hope i would get a mortgage easily- perfect credit and my salary is 78k.

If we love the house and want to try to get it, would it be best to put 8% down and pay pmi with new mortgage.. then sell this condo and dump the money into the principle straight away? I wondered about other ways like bridge loans, but am scared- what if the condo does not sell for ages!

We are meeting the RE to go see it on Monday. It has been on the market a month i think and they just lowered it by 5k.
Any advice?
« Last Edit: June 24, 2018, 06:52:45 AM by dandypandys »

robartsd

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Re: lovely house just spotted- now what?
« Reply #1 on: June 21, 2018, 05:15:07 PM »
You could always put in an offer to buy the house with a condition of selling your condo. If condo doesn't sell, you're out earnest money (and an offer contingent on selling another property might not be the offer chosen by the seller).

If you love the house enough to risk carrying the house and the condo for a while (and can afford to do so), a conventional loan with 8% down and PMI is not the end of the world - just not the optimum way to buy a house. Remember the RE agent's job is selling property (even if you'r buyer's agent is job is not to sell you a particular property, their job is still to sell you property - that's what they get paid for), you're responsible for not letting yourself buy a deal that isn't good for you.

Another Reader

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Re: lovely house just spotted- now what?
« Reply #2 on: June 21, 2018, 06:04:51 PM »
HELOC on the condo?

dandypandys

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Re: lovely house just spotted- now what?
« Reply #3 on: June 22, 2018, 06:16:20 AM »
Seems a shame after spending the loan down, to just get another loan on it- with all the fees I presume they will add to it. Wish we had a rich relative who could spot us 10k for a few months.
I love the house, it's on a lake and everything, but I am kind of hoping there is something wrong with it, so we can start our search off from the right position. Maybe even sell the condo first- one sold in 4 days right next door to us!

Linda_Norway

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Re: lovely house just spotted- now what?
« Reply #4 on: June 22, 2018, 06:48:20 AM »
If the condo doesn't sell, you can rent it out. But it can be a financial pitfall. My parents were once in that situation, having to rent out their old house for 2 years and that was no good financial move for them.
But having an extra bridge mortgage for a while is a very normal thing to have, apparently. I heard that most people buy houses in that way. The other thing to consider is that even if you sell your old house at a given date, the buyer can decide to take over the house several months later. It is first then that you hand-over the key and get the money for the whole house. When we moved, I ended up paying 3 months mortgage on the old house, while we already lived in the new house. That was pretty sour money. You should definitely consider the take-over date if there comes an offer.

dandypandys

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Re: lovely house just spotted- now what?
« Reply #5 on: June 22, 2018, 07:12:22 AM »
I didn't know that about the hand over dates. Interesting. Yes a Bridge Loan, that might be the thing - if we could be sure it would sell within the time limit, of a year I think it is.
I wonder why some people move all the time- it is expensive, complicated and tiring to even begin thinking about! Thank you for answering some of my basic Qs, this will help when I meet the agent on Monday.

dandypandys

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Re: lovely house just spotted- now what?
« Reply #6 on: June 22, 2018, 07:38:23 PM »
So, hubs and I just drove over to the lovely house to have a peek.. it was sunset time, and noone was around so we looked in the windows and went into the back garden.. wow it is beautiful, right on a lake with lovely light and trees- huge garden.
Ahh we want it! (trying not to fall in love) Cant wait to see the inside on Monday.

Regarding the selling and buying at the same time I have some Qs swirling. I am not sure where best to read up on this (any website tips?)

What would be the optimum way to buy this house, or can you send me in the direction that would help me to figure out how to do a side by side comparison of the fees and costs of each approach (Do i just inquire with different lenders for example- any websites that can help with this comparison?)

A contingency offer, its a buyers market here in Orlando FL in our areas
A Bridge loan- seems pricey and complicated- after looking at some example fees and what if the condo doesn’t sell for ages?
A Home equity loan - seems cheaper way to go to get the extra downpayment we need? Would only be needed for the interim while the condo sells
OR putting 7% down (or whatever is left of the 30k after closing costs ) and paying PMI until we can sell the condo— so far this seems to be the cheapest way because properties in our area are selling in under 2 months.

Thanks!!!


« Last Edit: June 23, 2018, 09:53:09 AM by dandypandys »

dandypandys

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Re: Buying new home while also selling current, questions
« Reply #7 on: June 24, 2018, 06:51:07 AM »
 Our real estate agent got back to me about my Qs and told me the contingency idea is difficult in our areas, as homes are selling fast if priced right.

I just stumbled on the idea of 'recasting' if we buy the house with a full mortgage a little down payment, we can sell the condo after only moving once.. then recast to get the monthly payment back to what I was more used to- around 1300 maybe this is an idea? Anyone done this? Internet says it is cheaper than refinancing.. probably better than a bridge loan or Heloc?
Hopefully the lenders would let us have a 265k mortgage with 8% down?
I have perfect credit- up at 7 0r 8
 a tenured job of 78k,
no debts anywhere else
an asset of a paid off condo zillow says worth 114k.
 220k in 403b- aged 43.

Tomorrow will tell all, but I am impatient haha.This place is the first in 2 years of browsing the mls I have felt the love for.. its on a lake@ it has a workspace and large studio for my sidehustle. It is perfect for us.
Do my Mustachians think it is wise on my moderate income to make this stretch- is it a stretch - what is the MMM rule of thumb :?:

Also another Q- wondering what to say to a lender about my husband- he is a student earning around 12k for last two years, will earn more this year as he got new job at the uni, so he is positive addition :)
But he has no credit history- as he has never owned a credit card, has never had any loans. Should I just factor him out completely when i talk to the lenders?

Another Q! what if I took a short term loan on my 403b? is this very very bad?
« Last Edit: June 24, 2018, 07:27:08 AM by dandypandys »

Linda_Norway

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Re: Buying new home while also selling current, questions
« Reply #8 on: June 24, 2018, 08:23:13 AM »
Don't let the broker know that you fell in live with the house. Give a bid for a much lower price than they ask for and don't appear too enthousiastic. If they know you want to have it, they won't accept the lower price.
And find out why the house hasn't been sold all that time. Was it just the high price or are there some aspects that make it unattractive? You need to be aware of any issues and see if you can live with those.

dandypandys

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Re: Buying new home while also selling current, questions
« Reply #9 on: June 24, 2018, 08:38:28 AM »
Thanks Linda, yes I wonder- i think it was only up for a month.. they dropped it 5 k soon after, maybe they are desperate to get rid of it since it is uninhabited now. It has a tiny wee kitchen for the type of house it is. Doesn't bother us though

Good advice to act cool... when we are jumping up and down

Looks like I can get a loan from my 403b up to 50k. (checking with HR tomorrow to confirm)
We would need 37k to get 20% down. 6% interest rate, finance charge of 1200, for a year- can be up to five years.
I am wondering if they can be paid off early as soon as the condo sells. :?:
We could just get 10k out of it, and only put 10% down suck up pmi until condo sells.
I am hesitant about this idea, time out of the market *shudder*
« Last Edit: June 24, 2018, 09:02:13 AM by dandypandys »

Car Jack

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Re: Buying new home while also selling current, questions
« Reply #10 on: June 25, 2018, 07:55:23 AM »
*What I did* in this situation.

We found the house we planned to buy, negotiated and agreed on a price.  We put our existing house on the market.  The offer on the new house was contingent on selling the old house with a time limit.  If the time was hit, the sellers could accept another offer, return our deposit and sell to someone else.

What actually happened is that we sold our house in about 3 weeks.  We then scheduled closings on the same day.  We attended the "sell" closing with our lawyer (we hired the bank lawyer to also represent our interests which was cheap because he was to be there for the bank anyways).  While we were there, our friends were at the house finalizing loading the rented moving truck.  We came home with pizza.  Everyone ate, then we drove the 7 miles to the new house.

While we unloaded into the new house, our lawyer did the "buy" closing.  After the closing, the lawyer came buy the new house to give us whatever papers we needed.


Personally, I would never carry two properties at the same time.  We have way too many friends who did exactly this in a market that was declining.  They all took huge financial baths when they finally sold the old house.  In our case, we very quickly dropped our house price (like every other day) until we hooked a serious buyer who offered. 

dandypandys

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Re: Buying new home while also selling current, questions
« Reply #11 on: June 25, 2018, 08:35:31 AM »
Luckily our condo is very cheap to maintain- 35$ a month elec, 320 condo fees a month which covers exterior, roof etc insurance, pool, lawns, water, garbage, then the 200 a year taxes that we paid all at once. We also don't have interior insurance at the moment, there has been a slight lag- we should get it back on asap!
So yeah, if we had to carry it for  say 6 months we would be pissed, but not too bad money wise.

Thank you for your story, it really helps us get a picture of things.

Greenstache

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Re: Buying new home while also selling current, questions
« Reply #12 on: June 25, 2018, 08:36:18 AM »
It's important to remember that getting the PMI removed is likely to not be as simple as merely getting your equity in the new place up to 20% after the sale.  Some lenders require that equity is at 22% or some other variation of the standard formula, and most loans include a stipulated time length before they will even consider cancelling PMI (could be a stipulated 1 or 2 years from sale date - will depend on your specific loan terms).  Furthermore, you'll usually have to request the cancellation in writing, and they then may require another appraisal to evaluate whether your equity position is really at their required threshold.  All of this becomes even more complex if your mortgage is repackaged and sold shortly after purchase, which is pretty common - then you'd have to work through the ultimate loan servicer to get out of it. 

dandypandys

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Re: Buying new home while also selling current, questions
« Reply #13 on: June 25, 2018, 08:47:33 AM »
Ah yes, thanks for the reminder to ask these Qs. I had PMI on this condo when i bought it in 2005- it did take slightly more than 20% -there was an ltv calculator  on the my account, so that was handy.. and yes i had to write a letter. I paid off the 30 year mortgage in 10 years due to some of my sidehustle and extreme frugality :) :) Hoping to do the same again.

FINate

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Re: Buying new home while also selling current, questions
« Reply #14 on: June 25, 2018, 09:28:45 AM »
On market for a month, price drop, in a seller's market? Unless it went pending then the deal fell through (should show on the price history in Zillow), then something's up with this. Price too high, something undesirable about the property (high HOA, high insurance, ???).

Whatever the case may be, you apparently want a home few are interested in. And that's good. You have some room to negotiate. But tread carefully - get a thorough home inspection, title check (make sure there are no liens or unpaid property taxes), and read the seller's disclosures carefully (not sure if this is a thing in FL).

Unless you're really really in love with the house then I would make an offer with a contingency on selling your current place. If they're motivated then there's a good chance they'll accept the offer. If they don't accept it, well...you weren't in love with it anyway. C'est la vie.

If you're in love with the house, well, then it's worth it to you to pay more to make sure the deal happens. Don't know if there are any gotchas using a HELOC for a downpayment (the lending bank usually wants to know where funds for the down are coming from), so do your research on this. I would be inclined to just do less down with PMI just for the simplicity of it.

dandypandys

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Re: Buying new home while also selling current, questions
« Reply #15 on: June 25, 2018, 09:35:13 AM »
ah thanks, I didn't know how to find out that price change info and when it was listed.. helpful thank you.


06/19/18   Price change   $265    $134   $/sqft
06/09/18   Listed for sale   $270    $137   $/sqft   
12/28/16   Sold   $242,500

Counting down the hours until we can go see it!! weeeeee
« Last Edit: June 25, 2018, 09:50:15 AM by dandypandys »

Spitfire

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Re: Buying new home while also selling current, questions
« Reply #16 on: June 25, 2018, 10:32:17 AM »
The safe route, of course, is selling first or doing a contingency. I would consider the 403b loan in this situation if you can handle the payments and are very confident in selling your condo. They are usually cheap and your job sounds stable.

FIreDrill

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Re: Buying new home while also selling current, questions
« Reply #17 on: June 25, 2018, 10:47:24 AM »
Do you know how much PMI would actually cost?

We just did 5% down on a home and we are paying an extra 1.7% on just the 15% PMI portion of the loan.  We felt more comfortable having cash on hand for any issues that may arise than getting rid of PMI right away.

Another thing, most mortgages require you to pay at least 2 years of PMI before dropping it off (at least ours does).  So if you start out with PMI then you have a minimum of 2 years of PMI payments, even if you drop cash and get to 78% LTV a couple months after closing.

robartsd

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Re: Buying new home while also selling current, questions
« Reply #18 on: June 25, 2018, 01:24:22 PM »
I was under the impression that PMI must be cancelled by the lender once you reach 78% LTV ratio and that lenders must cancel PMI upon request once you reach 80% LTV ratio (for these rules the valuation is the lesser of the purchase price or purchase appraisal); but this might vary state to state.

FIreDrill

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Re: Buying new home while also selling current, questions
« Reply #19 on: June 25, 2018, 01:55:05 PM »
I think it depends more on the lender than the state but I know some mortgage terms require a 2-5 year "seasoning" before Pmi can be eliminated. 
I was under the impression that PMI must be cancelled by the lender once you reach 78% LTV ratio and that lenders must cancel PMI upon request once you reach 80% LTV ratio (for these rules the valuation is the lesser of the purchase price or purchase appraisal); but this might vary state to state.

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dandypandys

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Re: Buying new home while also selling current, questions
« Reply #20 on: June 25, 2018, 03:28:07 PM »

So back from the viewing- first impression was ok/good, but def tinged with disappointment. The pics made it look so much nicer- but it has an older look overall in person.
Thank you so much for teaching me a lot in a few posts over the last few days.. you guys are great.. I feel that everything that was said, and this experience has helped me understand the process and the way forward for us. I have a much better understanding.
I am relieved we are not about to make a rash decision.. now we can spend some time getting our ducks more in a row.
Here is the house if you are curious: https://www.zillow.com/homes/7-Lotus-Lake-Dr,-Casselberry,-FL-32707_rb/13_zm/

Linda_Norway

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Re: Buying new home while also selling current, questions
« Reply #21 on: June 26, 2018, 02:53:50 AM »

So back from the viewing- first impression was ok/good, but def tinged with disappointment. The pics made it look so much nicer- but it has an older look overall in person.
Thank you so much for teaching me a lot in a few posts over the last few days.. you guys are great.. I feel that everything that was said, and this experience has helped me understand the process and the way forward for us. I have a much better understanding.
I am relieved we are not about to make a rash decision.. now we can spend some time getting our ducks more in a row.
Here is the house if you are curious: https://www.zillow.com/homes/7-Lotus-Lake-Dr,-Casselberry,-FL-32707_rb/13_zm/

Also a thing to consider: You can always modify the house, but you cannot modify where it stands.

But if the house has serious issues, like a bad foundation or a leaky roof, people tend the underestimate what it costs to repair it.
« Last Edit: June 26, 2018, 02:55:24 AM by Linda_Norway »

robartsd

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Re: Buying new home while also selling current, questions
« Reply #22 on: June 26, 2018, 08:50:28 AM »
PMI cancellation rights are in US Federal Law.

The lender must cancel PMI automatically when the loan is first scheduled to reach 78% LTV based on original value - note that this is based on original value and scheduled payments, extra payments do not move up the automatic termination date. If the loan is not current on the automatic termination date, the lender must cancel PMI on the first of the first month after the loan becomes current.

The borrower has the right to request PMI be canceled when the actual loan balance reaches 80% LTV based on the original value. In this case the lender may require a borrower paid appraisal to establish that the current value of the home is not less than the original value.

Lenders are not required to allow cancellation based on appreciated or improved value (some do allow this but may require waiting periods and/or lower LTV ratio than cancellation based on original value).

dollarchaser

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Re: Buying new home while also selling current, questions
« Reply #23 on: June 28, 2018, 06:16:49 PM »
We didn't wait for being in 100% correct position. Now we own a fixer upper with no water service yet. And have a contract pending to get out from under our clown house.
 Did I mention moving into a rental until new house is ready and jobs are lined up 100 miles away!!!!

My wife and I have a deep feeling of happiness through all of this. It was the right choice for us. Our position of strength was being worked at homes for years and looking, dreaming and brainstorming where to live paid off.

The condo should be the least of your issues. PAID FOR. Take your swagger out for a walk and make it happen if it feels right. That could mean big moves on a fast timetable. Be mentally ready for that and good luck. For example our lender fell through. For the first time I tapped my 401, to the tune of 37k. Paid the new house in full at closing.
They show you photographs of how your life should be
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