Need advice on new home purchase

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sjeff3
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Need advice on new home purchase

Post by sjeff3 » Mon Feb 12, 2018 4:35 pm

DW and I are planning the purchase of a new home close to family. Our current home is paid for with a value of appx $250K. We expect the new home to be about $250K or just a little more. My plan was to move and rent for a time as we shop, but that didn't fly with my wife. She does not like the idea of moving twice. My question is how do I buy a new home before I sell the current residence? A bridge loan seems to come with many fees that I'd like to avoid. We have appx $100K as a down payment and we are both in our mid 60s if a reverse mortgage home equity is an option. I appreciate any advice!

Jags4186
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Re: Need advice on new home purchase

Post by Jags4186 » Mon Feb 12, 2018 4:39 pm

Can you not qualify for a conventional mortgage?

bloom2708
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Re: Need advice on new home purchase

Post by bloom2708 » Mon Feb 12, 2018 4:44 pm

Most people list their current house. You accept an offer and set a closing date some point out in the future. This offer may be contingent on their house selling.

Now you shop for a new house and put in an offer near the closing date of your current house. If you can't find a house fast enough, you rent, stay with family or some other option.

You can make your offer contingent on your house selling. Much will depend on how hot the market it in your current and new areas. You may not have the flexibility to set long closing dates, contingent offers.

If you can qualify for both mortgages and have the 20% down, then you can buy the new before your current sells. At the $250k price point, that seem like a reasonable option. People in HCOL areas often cannot do that.

You shouldn't have to move twice, but you might have to go back and forth for closings/house cleanings.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

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lthenderson
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Re: Need advice on new home purchase

Post by lthenderson » Mon Feb 12, 2018 5:33 pm

Jags4186 wrote:
Mon Feb 12, 2018 4:39 pm
Can you not qualify for a conventional mortgage?
We've always just gone this route and got a regular mortgage for the new house and once moved, do cosmetic work to the old house and sell it. Once you have the old house sold, you can simply pay off the new mortgage early or invest in other ways.

runner3081
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Re: Need advice on new home purchase

Post by runner3081 » Mon Feb 12, 2018 5:44 pm

lthenderson wrote:
Mon Feb 12, 2018 5:33 pm
Jags4186 wrote:
Mon Feb 12, 2018 4:39 pm
Can you not qualify for a conventional mortgage?
We've always just gone this route and got a regular mortgage for the new house and once moved, do cosmetic work to the old house and sell it. Once you have the old house sold, you can simply pay off the new mortgage early or invest in other ways.
+1 we did this as well.

It sounds like they know the area they are moving to, but if not it is always best to rent at first.

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CAsage
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Re: Need advice on new home purchase

Post by CAsage » Mon Feb 12, 2018 6:37 pm

You are lucky enough to (probably) be able to find a new house, buy it with that $100k down payment, take time to do any work to it needed (paint/remodel/carpet) so it's ready, without the hassle of moving in and working around boxes. Then, move. Fix up the old house, hire a stager to put a few pieces of furniture and pictures in, and sell it without undue pressure! If I had that option, I would sure do that rather than stress out trying to coordinate a sale/buy/move.... Pay off new house with proceeds when done.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

sjeff3
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Re: Need advice on new home purchase

Post by sjeff3 » Mon Feb 12, 2018 6:48 pm

You are lucky enough to (probably) be able to find a new house, buy it with that $100k down payment, take time to do any work to it needed (paint/remodel/carpet) so it's ready, without the hassle of moving in and working around boxes. Then, move. Fix up the old house, hire a stager to put a few pieces of furniture and pictures in, and sell it without undue pressure! If I had that option, I would sure do that rather than stress out trying to coordinate a sale/buy/move.... Pay off new house with proceeds when done.
That's exactly the plan! I'm just looking for the least expensive way to float this mortgage for a few months. I'm wondering about taking out a out a Reverse Mortgage Line of Credit/Home Equity, using it to help pay for the new home and pying it off when I sell the old home?

cookieid
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Re: Need advice on new home purchase

Post by cookieid » Mon Feb 12, 2018 8:48 pm

I'd suggest heloc. I was in a similar situation and got a heloc from a credit union. When the old house sold they charged $50 for recording fee. That's the total fee for my heloc. Some banks/credit unions may charge fees if you pay it off early.

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Watty
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Re: Need advice on new home purchase

Post by Watty » Mon Feb 12, 2018 8:54 pm

Whoever you are buying your next home from is in the same situation and when the sale is finalized is negotiable. The same is true of whoever buys your home. You may be able to negotiate a date that will allow you to move directly from one home to the next. You can also sometimes figure out ways to rent one house to or from the buyer or seller for a short period of time.
Last edited by Watty on Mon Feb 12, 2018 10:08 pm, edited 1 time in total.

chevca
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Re: Need advice on new home purchase

Post by chevca » Mon Feb 12, 2018 9:07 pm

sjeff3 wrote:
Mon Feb 12, 2018 6:48 pm
You are lucky enough to (probably) be able to find a new house, buy it with that $100k down payment, take time to do any work to it needed (paint/remodel/carpet) so it's ready, without the hassle of moving in and working around boxes. Then, move. Fix up the old house, hire a stager to put a few pieces of furniture and pictures in, and sell it without undue pressure! If I had that option, I would sure do that rather than stress out trying to coordinate a sale/buy/move.... Pay off new house with proceeds when done.
That's exactly the plan! I'm just looking for the least expensive way to float this mortgage for a few months. I'm wondering about taking out a out a Reverse Mortgage Line of Credit/Home Equity, using it to help pay for the new home and pying it off when I sell the old home?
Which "least expensive" way are you looking for... lowest interest rate/least amount of interest paid, or lowest monthly payment for a few months?

TheAccountant
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Re: Need advice on new home purchase

Post by TheAccountant » Mon Feb 12, 2018 9:17 pm

You can make an offer on the home you want contingent on your current home selling.

DanL
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Re: Need advice on new home purchase

Post by DanL » Mon Feb 12, 2018 10:12 pm

Hi - retired Loan officer (30 years in biz) here...

After seeing thousands of situations like this....just sell your present house and purchase contingent on the sale of your present home. The other ways (having two houses with two loans) as have been suggested all have too much stress attached unless you have high income.

Stay away from reverse, bridge, private money or any other complicated mortgages. IMO...They all have fees not worth it and with Frank Dodd the lenders now put you through loan hell before you get any kind of loan even if you are A+ on credit.

chevca
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Re: Need advice on new home purchase

Post by chevca » Mon Feb 12, 2018 10:20 pm

Except that their current home is paid for, so no mortgage there. What then, loan officer? :happy

No one has suggested carrying two mortgages in this one.

DanL
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Re: Need advice on new home purchase

Post by DanL » Tue Feb 13, 2018 7:54 pm

chevca wrote:
Mon Feb 12, 2018 10:20 pm
Except that their current home is paid for, so no mortgage there. What then, loan officer? :happy

No one has suggested carrying two mortgages in this one.
Please note the following from their post above on 2.12 they said:

"That's exactly the plan! I'm just looking for the least expensive way to float this mortgage for a few months. I'm wondering about taking out a out a Reverse Mortgage Line of Credit/Home Equity, using it to help pay for the new home and pying it off when I sell the old home?

chevca
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Re: Need advice on new home purchase

Post by chevca » Tue Feb 13, 2018 8:16 pm

Please note the following from their very first post of the thread. :happy
sjeff3 wrote:
Mon Feb 12, 2018 4:35 pm
Our current home is paid for with a value of appx $250K.
They meant the new mortgage they would take out. Don't take them too literal there about the float.

Jags4186
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Re: Need advice on new home purchase

Post by Jags4186 » Tue Feb 13, 2018 8:18 pm

OP,

Depends what’s most important to you. If it’s absolute lowest cost without regard for cashflow, I would look for a conventional 10 year mortgage with no origination fees. If it’s lowest payments possible, consider a 5/1 ARM. Or, borrow money from your kids for free :mrgreen:

You will still need to bring money to the table as, unless you FSBO, you will be hit for the realtor’s commission.

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