Moving from one paid-for house to another

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whatshappeninman
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Moving from one paid-for house to another

Post by whatshappeninman »

Hi,

My son is now 3.5 years old and we are starting to think about where we should be when he reaches traditional school age - decision number one is that it won't be where we are now, because we live in a large North Jersey city with lousy public schools and are already paying big property taxes along with big tuition.

We own a high-rise condo outright - paid off. Comparable units have sold for about $1M - so I am using that as a starting budget for a house in the 'burbs with a good school district. I am insistent that we do not take on any debt for this move - but how exactly does it work? I want to sell our current house, and use the cash (and possibly additional savings) to buy the new house. The good news is that we should have zero trouble selling our current unit - I think the typical time-on-market is a handful of days in this building.

I have a whole jumble of other questions and confusions as we negotiate this decision, but the question above is a primary concern. My wife seems pretty dead set on a very specific area in North Jersey as the only place with the number one school - any comments on that? Is there really only one king of the hill? While some districts are clearly superior, this seems like a fairly subjective topic and the rankings really seem to shift quite a bit from one year to the next, and among reviewers.
Goal33
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Re: Moving from one paid-for house to another

Post by Goal33 »

You sell your house first and negotiate a rent-back from the buyer for while you're looking for the new place.
sport
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Re: Moving from one paid-for house to another

Post by sport »

Here is what we did. We looked for a long time until we found exactly what we wanted. When we bought that, we took out a mortgage on the new house, and put the old house on the market. When the old house sold, we paid off the mortgage on the new house using the proceeds from the old one. We made sure that there were no penalties for early payment involved.
casualflower
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Re: Moving from one paid-for house to another

Post by casualflower »

Do you only eat at the single best restaurant? Drive the one best car? What happens when a new car gets great reviews, the year after you bought one, do you switch?

I've never understood the desire to have "the best" cause it's entirely subjective, mercurial, and subject to skew (through marketing, etc).

Schools have strengths and weaknesses and plenty of them will meet the needs of your kid. I've got 3 kids (K, 3rd, 5th). In my experience, two things make a good school: a good principal and a tradition of parental involvement. Look for that.
JGoneRiding
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Re: Moving from one paid-for house to another

Post by JGoneRiding »

Goal33 wrote: Sat Sep 30, 2017 11:11 pm You sell your house first and negotiate a rent-back from the buyer for while you're looking for the new place.
I disagree if the property you are selling is as hot as described, Then find the house your wife wants first so there is no pressure to hurry up. Put in a good offer on property B contingent on selling property A but without a very long closing period (45 days is fairly standard now because banks can't process in 30 with all the extra paperwork so I would ask for that and no longer). List property A as soon as you have an agreed purchase price. Try to plan to close on property A in the am and B in the pm or ask for 2-3 days rent back, I wouldn't plan any longer than that and I wouldn't close on B before A.

I have had several people work this fairly seamlessly it will be a little stressful but can be done as long as owners of property B aren't unnecessarily pushy.
Goal33
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Re: Moving from one paid-for house to another

Post by Goal33 »

JGoneRiding wrote: Sat Sep 30, 2017 11:47 pm
Goal33 wrote: Sat Sep 30, 2017 11:11 pm You sell your house first and negotiate a rent-back from the buyer for while you're looking for the new place.
I disagree if the property you are selling is as hot as described, Then find the house your wife wants first so there is no pressure to hurry up. Put in a good offer on property B contingent on selling property A but without a very long closing period (45 days is fairly standard now because banks can't process in 30 with all the extra paperwork so I would ask for that and no longer). List property A as soon as you have an agreed purchase price. Try to plan to close on property A in the am and B in the pm or ask for 2-3 days rent back, I wouldn't plan any longer than that and I wouldn't close on B before A.

I have had several people work this fairly seamlessly it will be a little stressful but can be done as long as owners of property B aren't unnecessarily pushy.
I disagree because you’ll have to compensate by offering a higher price to make up for the contingency.
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Meaty
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Re: Moving from one paid-for house to another

Post by Meaty »

metrunt wrote: Sat Sep 30, 2017 11:38 pm Do you only eat at the single best restaurant? Drive the one best car? What happens when a new car gets great reviews, the year after you bought one, do you switch?

I've never understood the desire to have "the best" cause it's entirely subjective, mercurial, and subject to skew (through marketing, etc).

Schools have strengths and weaknesses and plenty of them will meet the needs of your kid. I've got 3 kids (K, 3rd, 5th). In my experience, two things make a good school: a good principal and a tradition of parental involvement. Look for that.
Agree. The student makes a much bigger difference than the school. Extreme example - have you heard of the kids going to gang riddled inner city schools that go to Harvard?
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jfn111
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Re: Moving from one paid-for house to another

Post by jfn111 »

Goal33 wrote: Sun Oct 01, 2017 12:27 am
JGoneRiding wrote: Sat Sep 30, 2017 11:47 pm
Goal33 wrote: Sat Sep 30, 2017 11:11 pm You sell your house first and negotiate a rent-back from the buyer for while you're looking for the new place.
I disagree if the property you are selling is as hot as described, Then find the house your wife wants first so there is no pressure to hurry up. Put in a good offer on property B contingent on selling property A but without a very long closing period (45 days is fairly standard now because banks can't process in 30 with all the extra paperwork so I would ask for that and no longer). List property A as soon as you have an agreed purchase price. Try to plan to close on property A in the am and B in the pm or ask for 2-3 days rent back, I wouldn't plan any longer than that and I wouldn't close on B before A.

I have had several people work this fairly seamlessly it will be a little stressful but can be done as long as owners of property B aren't unnecessarily pushy.
I disagree because you’ll have to compensate by offering a higher price to make up for the contingency.
I agree with the disagree. :shock: Contingent offers are the least attractive so they have to be a little higher to make up for the risk to the seller.
Grt2bOutdoors
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Re: Moving from one paid-for house to another

Post by Grt2bOutdoors »

Did not know Millburn is considered North Jersey. But Ridgewood also has highly regarded schools. Regardless of what town you move to, be resigned to fact you will be paying high property taxes in North/Central Jersey if you are talking about a $1M+ property. As other poster alluded to, you want a good teacher, principal and most important - parental involvement. Of course, environments matter - you don't want a high crime neighborhood and other bad influences to affect upbringing either. Good Luck.
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afan
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Re: Moving from one paid-for house to another

Post by afan »

Contingency provisions are very common. If the people from whom you are buying the new house have a real estate agent that person should tell them how much they should care. From what you describe there should be little risk of not selling your place.

Taking a bridge loan eliminates this problem but adds the hassle of a new loan. There will be costs of the mortgage even if you pay it off right after selling your condo. You have to compare both approaches to see which works better for you.
If you use a real estate agent that person should be a good source of advice about the best way to approach the purchase and sale.

The quality of schools essentially tracks the wealth and educational levels of the parents in an area. If you can identify the region with the highest income and highest percentage of adults with advanced degrees you will have found the area with the best schools.

The test scores and college admissions of the students will track their parents' socioeconomic status very closely. The schools will be clean, safe, in good repair and will have lots of facilities and programs not found in poorer areas. Teachers will see these as desirable places to work, they will not be overwhelmed by the challenges of poverty. Drug use will be as common as anywhere else but other crime will be rare. Fitting the backgrounds of the students and the wealth of the district, they will offer lots of advanced courses.

In that sense the schools really will be better. More important, the overall environment will be better.

Taxes to pay for all of this will be high. The alternative is to live somewhere safe but with lower taxes, worse schools and pay for private school. As a purely financial question, going for good schools is probably worth it because buyers will pay a premium for the schools when you eventually sell.
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runner540
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Re: Moving from one paid-for house to another

Post by runner540 »

Check out this thread about school districts. viewtopic.php?f=2&t=228782&newpost=3554 ... ead#unread

Archimedes makes excellent points. If the main point driving your decision is schools, I recommend you dig into the research about what predicts test scores, and how school rankings are influenced. Wanting to be in the absolute #1 school district rather than a merely good one can be a form of conspicuous consumption/signaling. I want to drive a safe, reliable car with certain features, but that doesn't mean a Mercedes SUV is the only acceptable option.
sport
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Re: Moving from one paid-for house to another

Post by sport »

afan wrote: Sun Oct 01, 2017 6:44 am Taking a bridge loan eliminates this problem but adds the hassle of a new loan. There will be costs of the mortgage even if you pay it off right after selling your condo.
When we took out a mortgage on the new house, we got one that had no costs in exchange for a higher interest rate. Since we held the mortgage only until the old house sold, the small difference in the interest rate was inconsequential.
mouses
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Re: Moving from one paid-for house to another

Post by mouses »

I got a loan to bridge for a few months while in transition and then paid it off. I have forgotten the details, but I think the loan was on the current house to buy the new house. I am also not sure if it was a mortgage with no prepayment penalties or a home equity loan.

I bought the new house, sold the old house with a provision that I could rent it for a few months while I sorted through decades of belongings to decide that to get rid of and what to move, then moved.

Perhaps buyers would be reluctant to do the rent thing, but the buyers in my case were happy to get the rent since they were working with an architect drawing up plans and wouldn't have been living in the house anyway.

This removes a lot of stress for a small cost in interest and loan setup payments.
JGoneRiding
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Re: Moving from one paid-for house to another

Post by JGoneRiding »

jfn111 wrote: Sun Oct 01, 2017 6:08 am
Goal33 wrote: Sun Oct 01, 2017 12:27 am
JGoneRiding wrote: Sat Sep 30, 2017 11:47 pm
Goal33 wrote: Sat Sep 30, 2017 11:11 pm You sell your house first and negotiate a rent-back from the buyer for while you're looking for the new place.
I disagree if the property you are selling is as hot as described, Then find the house your wife wants first so there is no pressure to hurry up. Put in a good offer on property B contingent on selling property A but without a very long closing period (45 days is fairly standard now because banks can't process in 30 with all the extra paperwork so I would ask for that and no longer). List property A as soon as you have an agreed purchase price. Try to plan to close on property A in the am and B in the pm or ask for 2-3 days rent back, I wouldn't plan any longer than that and I wouldn't close on B before A.

I have had several people work this fairly seamlessly it will be a little stressful but can be done as long as owners of property B aren't unnecessarily pushy.
I disagree because you’ll have to compensate by offering a higher price to make up for the contingency.
I agree with the disagree. :shock: Contingent offers are the least attractive so they have to be a little higher to make up for the risk to the seller.
A Long rent back with no offer pending on another place and not even sure where they want to buy for sure is going to turn off the buyer on property A and may cost more than offering a SLIGHT increase on property B. But really this is where your real estate agent earns some money. Its their job to talk the agent of property B into the fact that A will sell rapidly once listed and they may already have an interested buyer (a good agent should be telling potential buyers of theirs about property they know will be coming on soon)
stan1
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Re: Moving from one paid-for house to another

Post by stan1 »

sport wrote: Sat Sep 30, 2017 11:26 pm Here is what we did. We looked for a long time until we found exactly what we wanted. When we bought that, we took out a mortgage on the new house, and put the old house on the market. When the old house sold, we paid off the mortgage on the new house using the proceeds from the old one. We made sure that there were no penalties for early payment involved.
This is what we did in a strong seller's market. Old house and new house both sold in 3 days with multiple offers. The hardest part was finding the new house and I'd wonder if that will be true in the OP's situation as well. Note you'll have to come up with the down payment through other savings or a HELOC on the old property. The lender will want to see very good income (not just assets) to make this happen.

As a seller in a hot market I would not consider any offer that is contingent upon sale of an existing house. A rentback on the old house can help if you have already made an offer on the new house and need 30-90 days extra to sync the move. Where I live buyers are willing to accept rentbacks as part of the terms of the sale. A rentback may not be of much use if you have yet to make an offer on a new house and in fact could make you feel rushed to compromise on a new house in order to avoid temporary housing.

The other option is to sell the current condo and move into temporary housing until you find a new home.
Goal33
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Re: Moving from one paid-for house to another

Post by Goal33 »

JGoneRiding wrote: Sun Oct 01, 2017 11:03 am
jfn111 wrote: Sun Oct 01, 2017 6:08 am
Goal33 wrote: Sun Oct 01, 2017 12:27 am
JGoneRiding wrote: Sat Sep 30, 2017 11:47 pm
Goal33 wrote: Sat Sep 30, 2017 11:11 pm You sell your house first and negotiate a rent-back from the buyer for while you're looking for the new place.
I disagree if the property you are selling is as hot as described, Then find the house your wife wants first so there is no pressure to hurry up. Put in a good offer on property B contingent on selling property A but without a very long closing period (45 days is fairly standard now because banks can't process in 30 with all the extra paperwork so I would ask for that and no longer). List property A as soon as you have an agreed purchase price. Try to plan to close on property A in the am and B in the pm or ask for 2-3 days rent back, I wouldn't plan any longer than that and I wouldn't close on B before A.

I have had several people work this fairly seamlessly it will be a little stressful but can be done as long as owners of property B aren't unnecessarily pushy.
I disagree because you’ll have to compensate by offering a higher price to make up for the contingency.
I agree with the disagree. :shock: Contingent offers are the least attractive so they have to be a little higher to make up for the risk to the seller.
A Long rent back with no offer pending on another place and not even sure where they want to buy for sure is going to turn off the buyer on property A and may cost more than offering a SLIGHT increase on property B. But really this is where your real estate agent earns some money. Its their job to talk the agent of property B into the fact that A will sell rapidly once listed and they may already have an interested buyer (a good agent should be telling potential buyers of theirs about property they know will be coming on soon)
Since we are just two random people on the internet I don’t want to argue with you, and I don’t know what real estate market you come from but you are wrong because rent backs don’t hurt the price and contingencies do. In fact, rent backs indicate that you’re living there and not desperate to close a deal giving you even more leverage on selling price. Contingency is going to mean you’re desperate to sell the old place to get into the new one and may lose money on both ends.
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jabberwockOG
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Re: Moving from one paid-for house to another

Post by jabberwockOG »

In the last two towns that we lived in, real estate offers that had buyer's house must sell contingencies were routinely immediately rejected especially on nice houses. That kind of contingency contract might work for buying an overpriced dog that had been sitting for months unsold but certainly not for a nice house in an in demand neighborhood.

Suggest you get a HELOC and use that plus some savings to buy the new home first, then sell the old home. Or obtain a new mortgage with 0 closing costs (by getting an above par rate mortgage) and then pay off the loan on the sale of old home.

Buy the best neighborhood you can afford and the schools should be fine in that area. If I had it to do over again I would stay out of typical pricey high end suburbs where kids and parents are trapped without a car. Way better to live in an area with great public transportation so that kids have lots of options for getting around and lots of activity options without having to drive cars when they are 16 yo even if the schools are not the absolute best.

Lots of the supposedly very best schools in high end suburbs, where the top end G&T tracked kids do very well, are mostly filled with lower tracked spoiled, bored to death, drugged out or alcohol abusing kids - so be very careful what you wish for.
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Traveller
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Re: Moving from one paid-for house to another

Post by Traveller »

Depending on the new house cost compared to the current home value and if you have additional cash you can tap into, it may be easier and cheaper to take out a home equity loan on your current place. You'll likely only be able to tap into 80-85% of the value however.

Edit: looks like Jabberwock said the same thing while I was typing...
mouses
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Re: Moving from one paid-for house to another

Post by mouses »

jabberwockOG wrote: Sun Oct 01, 2017 2:53 pm Lots of the supposedly very best schools in high end suburbs, where the top end G&T tracked kids do very well, are mostly filled with lower tracked spoiled, bored to death, drugged out or alcohol abusing kids - so be very careful what you wish for.
What's G&T?
Goal33
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Re: Moving from one paid-for house to another

Post by Goal33 »

mouses wrote: Sun Oct 01, 2017 4:32 pm
jabberwockOG wrote: Sun Oct 01, 2017 2:53 pm Lots of the supposedly very best schools in high end suburbs, where the top end G&T tracked kids do very well, are mostly filled with lower tracked spoiled, bored to death, drugged out or alcohol abusing kids - so be very careful what you wish for.
What's G&T?
Gifted and talented

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Topic Author
whatshappeninman
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Re: Moving from one paid-for house to another

Post by whatshappeninman »

Thanks for the replies!

We found a place we are interested in, but I need to get the detailed plan in place and am leaning towards a bridge loan.

Anyone have any recommendations (or at least names) of places that offer bridge loans? Looks like this is not a product offered by big banks.
sport
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Re: Moving from one paid-for house to another

Post by sport »

whatshappeninman wrote: Sat Oct 21, 2017 11:40 am Thanks for the replies!

We found a place we are interested in, but I need to get the detailed plan in place and am leaning towards a bridge loan.

Anyone have any recommendations (or at least names) of places that offer bridge loans? Looks like this is not a product offered by big banks.
I wanted a bridge loan when we bought our new house before the old one sold. I went to a local S&L and they advised me to just get a mortgage on either house, and then pay it off when the old one sold. So, I got a "no fee" mortgage on the new house. The higher rate was not a problem because we paid it off after a short time. There was no prepayment penalty.
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Re: Moving from one paid-for house to another

Post by Sandtrap »

Rent in the area you desire. Sell existing home. Simple transaction. Shop for new home. Buy new home. Simple transaction. Shop for new school.
Minimize expenses. Simple is good.
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Topic Author
whatshappeninman
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Re: Moving from one paid-for house to another

Post by whatshappeninman »

sport wrote: Sat Oct 21, 2017 12:43 pm
whatshappeninman wrote: Sat Oct 21, 2017 11:40 am Thanks for the replies!

We found a place we are interested in, but I need to get the detailed plan in place and am leaning towards a bridge loan.

Anyone have any recommendations (or at least names) of places that offer bridge loans? Looks like this is not a product offered by big banks.
I wanted a bridge loan when we bought our new house before the old one sold. I went to a local S&L and they advised me to just get a mortgage on either house, and then pay it off when the old one sold. So, I got a "no fee" mortgage on the new house. The higher rate was not a problem because we paid it off after a short time. There was no prepayment penalty.
Follow-up: This is pretty much what we did. We took a note out on the new house, which wound up saving us a lot of headaches as the buyers of our old place fumbled and stumbled and the closing date slipped by several weeks. 6 weeks later (and slightly late for what would have been my first mortgage payment), we closed on our old place and I went down to the bank to pay the note on our new place off.

The privilege of this financing cost us around $30G in interest and loan processing fees. But we sure are glad we made a very timely move away from a densely populated area.
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