How do people sell a house and buy one at the same time?

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defscott627
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How do people sell a house and buy one at the same time?

Post by defscott627 »

I live in a 3-bedroom Co-op in NY, and my wife and I are looking to sell it and buy a house. We are trying to do this without having to do a rental in between since we have a 9 month old, but I can't seem to figure out a way to do this. The co-op does not allow rent-back agreements so that option is out. I know I could give offers for a house with a contingency that I sell my existing property, but how does the timing work out with closing dates if I need my money from my equity in the co-op (since I intended to put more than 20% down on the house)?

Are there other options I'm not thinking of? I can't afford to run two places at the same time so even though I have the down payment liquid for the house, I am afraid (since I am at the mercy of the co-op board) that the sale will take a long time, and I will be funneling cash into running two properties.
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jfn111
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Re: How do people sell a house and buy one at the same time?

Post by jfn111 »

What most people do, in my market, is list their house and start aggressively looking for a new house. You can make an offer on the new house contingent on the sale of your existing Co-op. Warning, sellers don't like open ended contingencies. Once you have your Co-op under contract then you can make an offer based on the successful closing of the Co-op. (Sellers are much more agreeable to this.
Once you have your place under contract and a signed purchase agreement on the new place you can set a same day closing for both places. You close on the Co-op in the morning and take a check, or have the money wired, to the afternoon closing on the new place. YMMV based on the norms of your market.
Silk McCue
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Re: How do people sell a house and buy one at the same time?

Post by Silk McCue »

Look into getting a Bridge loan.

Cheers
deltaneutral83
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Re: How do people sell a house and buy one at the same time?

Post by deltaneutral83 »

With a sizable taxable and short term funds needed to buy the new house and then subsequently sell the existing, a margin loan at Interactive Brokers can be advantageous.
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Re: How do people sell a house and buy one at the same time?

Post by 123 »

Some people use cash.
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Re: How do people sell a house and buy one at the same time?

Post by Jack FFR1846 »

viewtopic.php?f=2&t=318322&p=5330511#p5330511

The topic was surrounding moving an exotic car and motorcycle, but I explained how we closed on the sale in the morning, went home to friends loading the rented moving truck, ate pizza and went on to our new house while the lawyer did the "buy" closing without us.

As others said, we put our house on the market and made the offer with contingency of selling our house. We put 20% down as a deposit on the new house. We realistically priced the house we were selling and had an accepted offer in 3 weeks. If you're looking to maximize your current home price, then forget about all this and look into a bridge loan or rent in between. Nobody's going to wait 5 months with an overpriced home for sale.
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TeacherLady
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Re: How do people sell a house and buy one at the same time?

Post by TeacherLady »

19 years ago we gave ourselves a bridge loan from my husband's 401k to buy/sell concurrently. We also took out a 1st and 2nd mortgage.

My goal was to sell our home only if we first could find a great house to move to. No point in selling a perfectly decent house if we had nowhere perfectly wonderful to go, and I did not want a contingency on the sale of our home.

The 401k loan worked out for us financially, as all principal and interest was paid back into the 401k, no fees, and the stock market was dropping. We bought our dream home in April and sold our then-current home in June.

The 401k loan enabled us to wheel & deal without pressure.

We paid back the 401k loan, the 2nd mortgage and a big chunk of the 1st mortgage from the sale of our then-current home.
knowledge
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Re: How do people sell a house and buy one at the same time?

Post by knowledge »

In normal times, a HELOC can come in handy for this purpose. From what I understand, the only way to do this without risk would be try to close both on the same day, but that won't be buyer-friendly on your sale side.

Last time I did this, I took the risk and purchased before selling. I lucked out but that's when the extra cash liquidity can come in handy.
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Re: How do people sell a house and buy one at the same time?

Post by abuss368 »

We went through this stress a few years ago and where asking the same questions and had the same concerns. After two very bad realtors we finally had an excellent realtor who guided us through everything.

Make sure you have an excellent realtor! I can not stress that enough.
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Re: How do people sell a house and buy one at the same time?

Post by orklc »

We kept the price of the next house low enough that we could qualify to carry both the old and new mortgage at the same time, which was a very different amount from our own notions of what we could afford long term. We got a longer term mortgage and put less down on the new house than we intended to long term. End result was no contingencies on either the old or new house, much simpler scheduling and lower stress. Closed on the new house in March, sold the old house in June with some minor painting / repairs in the middle. It did cost more (PMI in place for a few months, etc), but those costs were very worthwhile in the end.
dsmil
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Re: How do people sell a house and buy one at the same time?

Post by dsmil »

You can put offers on a house with a contingency. You'll just want your sale closing to be before the purchase closing so you can use the equity. Once your house sells, the contingency is dropped. Your purchase offer will look more attractive if you are already under contract to sell your home. If you are in a competitive market and you put offers in without your house being under contract yet, you probably won't have much luck.

You might also be able to add a "home of choice" contingency as the seller. Meaning that the sale of your house won't go through to the buyer until you've found a house. It's not ideal for someone buying your home, but if you're in a hot market, hopefully it doesn't cost you. Again, I don't think this makes your offer to buy a home more attractive, but it guards against you having to find temporary housing if you can sell your house but can't find one.
WS1
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Re: How do people sell a house and buy one at the same time?

Post by WS1 »

If you can qualify for your new mortgage while still having the existing mortgage and have the income/assets to survive double payments, that seems the easiest path.

P.S. Never done this
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Re: How do people sell a house and buy one at the same time?

Post by palaheel »

We moved into an apartment with a 6-month lease close to our desired location. The old house was in a good market, and priced fairly. It sold before we'd completed the touch-ups. DW then proceeded to break her hip rollerblading, and was confined to the apartment for six weeks. After that, we began looking for a new house, and moved from apartment to new house at the end of the lease.
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queso
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Re: How do people sell a house and buy one at the same time?

Post by queso »

WS1 wrote: Tue Jun 23, 2020 11:23 am If you can qualify for your new mortgage while still having the existing mortgage and have the income/assets to survive double payments, that seems the easiest path.

P.S. Never done this
We did this when we bought our current house. Previous house sat on the market a few months, but eventually sold. Ideally I would have liked a higher offer, but weighed the delta in the offer we took vs. the likelihood of getting a better offer in x months * the monthly mortgage payment for those months and decided to take it.
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Re: How do people sell a house and buy one at the same time?

Post by jharkin »

queso wrote: Tue Jun 23, 2020 11:26 am
WS1 wrote: Tue Jun 23, 2020 11:23 am If you can qualify for your new mortgage while still having the existing mortgage and have the income/assets to survive double payments, that seems the easiest path.

P.S. Never done this
We did this when we bought our current house. Previous house sat on the market a few months, but eventually sold. Ideally I would have liked a higher offer, but weighed the delta in the offer we took vs. the likelihood of getting a better offer in x months * the monthly mortgage payment for those months and decided to take it.
We did this. Had our house staged and ready, and the listing went live the day our offer to buy was accepted.

You need nerves of steel and you have to qualify to carry both mortgages. And a stron RE market.

We lucked out that our house sold in a weekend and only had 3 weeks of overlapping loans. But I’m not sure I’d risk it in the current environment.
flyingcows
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Re: How do people sell a house and buy one at the same time?

Post by flyingcows »

Have you considered a bridge loan? Assuming your comfortable with the risk incase the market value for your current property is less than expected

Or perhaps using a heloc to draw equity from your current property
delamer
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Re: How do people sell a house and buy one at the same time?

Post by delamer »

it's a tough situation.

You need to talk to a good realtor in the area where you want to buy, and find out the market conditions.

Our old house went under contract today, after we had already purchased and moved to our new house. We qualified to carry 2 mortgages and were comfortable doing so.

The market in old house area is such that offers contingent on the buyers selling an existing home are just not considered. There are too many buyers who don't need to sell an existing home for a seller to agree to that kind of contingency.

My recommendation is that you sell the co-op and then see how the board approval goes before you put in any offers on your new home. If you have to move into temporary housing, that's a pain of course. But the stress of 2 moves is much less than the stress of having loans on 2 properties that stretch you thin financially (assuming that you can qualify for 2 mortgages.)

Good luck.
Last edited by delamer on Tue Jun 23, 2020 12:07 pm, edited 1 time in total.
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Re: How do people sell a house and buy one at the same time?

Post by prairieman »

Last time we moved it was becoming a sellers market so we were more worried about finding a home and winning a bidding war than we were about selling our house. It took a year to find and purchase a new house, and then we temporarily borrowed money and owned both homes while our first home was selling.
It was annoying paying all the fees to get a loan that we had for such a short time. We paid off our second house when our first house sold two months after getting the loan.
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racy
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Re: How do people sell a house and buy one at the same time?

Post by racy »

Silk McCue wrote: Tue Jun 23, 2020 9:50 am Look into getting a Bridge loan.
AKA as a Cash Offer Loan. It works like this:
1. A homebuyer identifies a home they would like to purchase.
2. The homebuyer engages a service provider or agent to purchase the new home on behalf of the homebuyer.
3. A bridge loan is made to the service provider or agent, collateralized by the new home.
4. The homebuyer puts down an earnest money deposit and moves into the new home as a tenant.
5. When the homebuyer sells their current home or finalizes a mortgage for the new home, the service provider or agent sells the new home to the homebuyer and pays off the loan.
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Quirkz
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Re: How do people sell a house and buy one at the same time?

Post by Quirkz »

WS1 wrote: Tue Jun 23, 2020 11:23 am If you can qualify for your new mortgage while still having the existing mortgage and have the income/assets to survive double payments, that seems the easiest path.

P.S. Never done this
I have, and it took us 12 months to sell the original house. It was ugly, and we lost a lot of money in the process, and had an extremely stressful year trying to get through it. If you go this way, proceed very cautiously.
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Re: How do people sell a house and buy one at the same time?

Post by winterfan »

TeacherLady wrote: Tue Jun 23, 2020 10:34 am 19 years ago we gave ourselves a bridge loan from my husband's 401k to buy/sell concurrently. We also took out a 1st and 2nd mortgage.

My goal was to sell our home only if we first could find a great house to move to. No point in selling a perfectly decent house if we had nowhere perfectly wonderful to go, and I did not want a contingency on the sale of our home.

The 401k loan worked out for us financially, as all principal and interest was paid back into the 401k, no fees, and the stock market was dropping. We bought our dream home in April and sold our then-current home in June.

The 401k loan enabled us to wheel & deal without pressure.

We paid back the 401k loan, the 2nd mortgage and a big chunk of the 1st mortgage from the sale of our then-current home.
Interesting! I never thought about this.

OP- we are in a similar situation. It's tough because I live in a seller's market. People often offer cash. Maybe the loan from the 401k would be a good one.
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Re: How do people sell a house and buy one at the same time?

Post by foamypirate »

We just went through this. We submitted an offer on the house we were interested in (with contingency, but with a large 41% downpayment to show we were serious, based on proceeds we expected from our sale). Once that offer was accepted, we used our realtor to stage and list our house. Fortunately, we had a contract on the sale within 3 days, for full asking price.

After that, it was weeks of constant phone calls between realtors, title companies, lenders, moving into storage bays. Storage was the worst part, since we had nowhere to store our stuff in the inter-rim (because we had to be totally out of the house being sold in order to close, but couldn't move into the new house yet). EVERYTHING had to go into storage. It took three HUGE storage bays to hold everything. I had to drive everyone pretty hard to stay on schedule. We closed on the sale of our house on Feb 6th, and closed on the purchase on Feb 7th. We stayed in a hotel the night of the 5th, 6th, and 7th.

Everything went right for us, inspections on both ends, no major buyer demands, financing, etc. It was still VERY stressful. We finished the process from the day we first looked at the house we purchased, to close, in 5 weeks! I don't think I would do it that way again, it was just too much stress.

I'd do a bridge loan next time. :D
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Re: How do people sell a house and buy one at the same time?

Post by health teacher »

We went through this last year. We put an offer in on a house contingent on the sale of our home. To protect the seller, part of the contract stayed they could still accept offers on their house and we would have 72 hours to remove the contingency.

Our house was on the market for 2 months and they received an another offer which they accepted. We had 72 hours to remove the contingency and we did that by taking out a HELOC to use for 20% down payment and also pay off the balance of our 1st mortage. Our credit union happened to be offering a no fee HELOC at the time which was very beneficial. To qualify for the HELOC, we were required to temporarily remove our house from the market, go through the HELOC process, and then relist the house.

Luckily our house went under contract about 2 weeks later and we were able to do a simultaneous closing which allowed us to pay off the HELOC without ever paying interest. We also asked the buyer of our home for 2 weeks after closing so we could move out which was another major stress reliever. Paying a moving company was the best $1,000 we spent through the whole process.

I think it also helped that all of our finances were done at our local credit union. I bought the new house and sold old house with same real estate agent who happened to also be my buyers agent, so there were only 2 real estate agents involved in all of this (mine and my new house sellers). It was coordinated nicely.
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Re: How do people sell a house and buy one at the same time?

Post by StoneBob »

I am another who used a 401K loan as a bridge loan when I changed houses 6 years ago. Both houses were in the same city and the real estate market was healthy. I don't believe I would try this in a skewed or slow market or when moving between cities.

I was also able to qualify for the new mortgage while still carrying the mortgage on the old house and I had money for the down payment in the bank.

I closed on the new house and moved in, and put the old house one the market two weeks later. It sold quickly and I paid back the 401K loan.

I didn't have much cash left after the down payment and the 401K bridge loan was my contingency in case I had to support both properties for several months.

If you do this, make sure you allow for your trailing house to sell for less than you planned. The real estate market can change faster than your deal will take. This happened to me, but didn't derail the process.
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Re: How do people sell a house and buy one at the same time?

Post by rich126 »

Right now some areas are very low in inventory due to people not wanting to have strangers in their homes. A lot of virtual tours. I know in much of MD and AZ inventory of homes are at historically low levels. In AZ that has caused significant prices increases, in MD not as much.
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Re: How do people sell a house and buy one at the same time?

Post by TimeTheMarket »

We did recently with 401k loan and a personal loan. Confirmed with broker first we had income to cover two mortgages.
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buzzbee
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Re: How do people sell a house and buy one at the same time?

Post by buzzbee »

We did a 401k loan. Paid it back in 2 months with minimal interest.
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Re: How do people sell a house and buy one at the same time?

Post by Johnny Thinwallet »

We qualified for a new mortgage while still carrying our original mortgage on our existing condo. Closed on purchasing our new home in August, then closed on selling our condo in September. We owned both places for exactly 4 weeks. We planned for it financially to own both homes for a bit.

That said, our realtor had a guy waiting to buy our place when we sold it. He wanted a condo in our specific community with the exact specs that our condo had. He had turned down buying other condos in our community without the specs he wanted. And only about 10 percent of the condos in our community had the specs that he wanted that we had. We let him tour our condo before it hit the market, and he put an offer in immediately.

You can bet I used that info in the negotiations too. During each of the negotiation points, I would give a little but then say "This is as far as I go - take it or I go to market and show it to other buyers." He caved every time, and I got the money out of him that I wanted.
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defscott627
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Re: How do people sell a house and buy one at the same time?

Post by defscott627 »

Hi - I know I'm bringing up an old thread of mine but I had another idea. (Since I last posted, we are in contract on the property we are selling - we negotiated a longer closing - on or about November 15th (and can push to Dec. 15th) but we found a house we really like so I wanted to see if this was a feasible solution:

If we had three family members willing to be our private lender (and I guess we'd have to set the paperwork up with whatever the minimum interest is), could we buy the new home in cash without involving a bank at all? (With the money from our relatives). Then, after we sell our first house, refinance the new house and use the money plus the profit from the first house to pay back the three family members? Feasible? Thoughts?
Brandon4454
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Re: How do people sell a house and buy one at the same time?

Post by Brandon4454 »

I ended carrying two mortgages. My second house was really cheap and I might turn it into a rental at some point in the future. I'm currently renting out my first house to my girlfriend. I'll sell it if she gets a job out my way and moves.
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Re: How do people sell a house and buy one at the same time?

Post by mnnice »

jharkin wrote: Tue Jun 23, 2020 11:43 am
queso wrote: Tue Jun 23, 2020 11:26 am
WS1 wrote: Tue Jun 23, 2020 11:23 am If you can qualify for your new mortgage while still having the existing mortgage and have the income/assets to survive double payments, that seems the easiest path.

P.S. Never done this
We did this when we bought our current house. Previous house sat on the market a few months, but eventually sold. Ideally I would have liked a higher offer, but weighed the delta in the offer we took vs. the likelihood of getting a better offer in x months * the monthly mortgage payment for those months and decided to take it.
We did this. Had our house staged and ready, and the listing went live the day our offer to buy was accepted.

You need nerves of steel and you have to qualify to carry both mortgages. And a stron RE market.

We lucked out that our house sold in a weekend and only had 3 weeks of overlapping loans. But I’m not sure I’d risk it in the current environment.
I have sold two houses in two radically different markets. The first time was as described above and we had a relocation deal that would pay for 2 mortgages up to 6 months.

The second was ultra slow near dead. After we final sold that we waited three years to buy another house. We had a couple contingency offers but of course they couldn’t sell either. Finially someone without a house to sell made an offer.
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Re: How do people sell a house and buy one at the same time?

Post by new2bogle »

Our friends sold their house and rented for 6/7 months until they found a house they liked. So that is one way.
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Re: How do people sell a house and buy one at the same time?

Post by new2bogle »

Brandon4454 wrote: Mon Jul 20, 2020 11:28 am I ended carrying two mortgages. My second house was really cheap and I might turn it into a rental at some point in the future. I'm currently renting out my first house to my girlfriend. I'll sell it if she gets a job out my way and moves.
Yeah, but you have to be able to qualify for two mortgages. This what we did when purchasing a new house - fortunately we found a renter in two days so we didn't have to pay double mortgage.
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Re: How do people sell a house and buy one at the same time?

Post by xerxes101 »

So most lenders use the 40% - 45% figure as maximum percentage of your income you could use towards your primary residence. You must include property taxes and insurance in that number.

First I would try and see if you could keep combined monthly payments for both houses under that 45% monthly income threshold. If you can do this, then you just have to be bold and do it. You will have two houses in your possession at the same time and you have to sell the first house as soon as possible. As others have suggested your first house must be ready to go, staged, and priced to sell in order to minimize time on market. In our area, houses are selling very fast because of historically low mortgage rates...(must be the same in your area but do not want to make any assumptions)

If the combined monthly payments of the two houses exceed 45% of your monthly income, then you could potentially take the following steps to get it to that number (a) refinance your current mortgage to spread out your payments, this could especially have a major impact if you go from say a 15 to 30 year loan (b) try to find an interest only loan for the house you want to purchase, this again is just to get the payments lower so you would qualify for both mortgages at the same time. I would try to go for say a 30 year, 10/1 ARM for example (I know such a product exists). Such a mortgage will give you the peace of mind for 10 years and during this ten years you could refi into the exact type of mortgage you want, and you could also pay towards principal as you please. good luck :beer
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GKSD
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Re: How do people sell a house and buy one at the same time?

Post by GKSD »

I had similar situation last year. When the home inspection came out all OK for the new house that I was buying, I started to prep to list my existing house. The seller wanted 45 day escrow close, so that gave me some more time to list and sell the existing house. I listed the house about 15 days prior to escrow close for new house and it was sold in about a week. Escrow close on new house 06/17, escrow close on old house 07/4, so about 3 weeks of extra mortgage payment on old house. This is in San Diego, CA - houses don't remain on market for long. My agent told me contingency is not advisable - there are multiple offers on a house and buyer would not want to take the risk with contingency.
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defscott627
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Re: How do people sell a house and buy one at the same time?

Post by defscott627 »

I just wanted to add some info to my original post.

We are already in contract for the place we are selling. However, it is a co-op so our buyers are still subject to board approval (which occurs after mortgage underwriting so we have probably 6 weeks before that).

We already have the down payment on a new home. The issue is, I don't think we will qualify for a mortgage on the second property while owning the first property so I was looking for some way to do it. My attorney is the one who mentioned a private loan if we had a family member (or members) willing to loan us the money for the new house. We don't have one family member who can do it, but we have three who can do it to add up to the price of the house, and then we would refinance after we close on the first place so we could pay back. It seems messy, though.
rockstar
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Re: How do people sell a house and buy one at the same time?

Post by rockstar »

Super interesting. I bought a new home without a contingency and sold my other home. I had enough income to be able to own both at the same time. That's what I did with my latest sale. I rented an AirBNB in between.

Are you buying too much house?
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defscott627
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Re: How do people sell a house and buy one at the same time?

Post by defscott627 »

rockstar wrote: Wed Jul 22, 2020 4:36 pm Super interesting. I bought a new home without a contingency and sold my other home. I had enough income to be able to own both at the same time. That's what I did with my latest sale. I rented an AirBNB in between.

Are you buying too much house?
I'm in New York so I have to stretch the income to house price ratio. The place we're selling is 730k in contract. The place we are buying is around 750k. I have a 470K mortgage on the first place so I doubt I will be approved for an additional 500k mortgage.

My wife and I make around 225k together.

We are planning on buying the 750k house (we have the down payment liquid without the sale of our first place) and also would like to add in the equity on our first place as well.
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Re: How do people sell a house and buy one at the same time?

Post by Sandtrap »

Buy new home in cash.
Move to new home.
Sell old home.

Have done this several times. I think there was one time that we rented for about 3-4 months in a new location until we found a nice home and property.

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rockstar
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Re: How do people sell a house and buy one at the same time?

Post by rockstar »

defscott627 wrote: Wed Jul 22, 2020 4:37 pm
rockstar wrote: Wed Jul 22, 2020 4:36 pm Super interesting. I bought a new home without a contingency and sold my other home. I had enough income to be able to own both at the same time. That's what I did with my latest sale. I rented an AirBNB in between.

Are you buying too much house?
I'm in New York so I have to stretch the income to house price ratio. The place we're selling is 730k in contract. The place we are buying is around 750k. I have a 470K mortgage on the first place so I doubt I will be approved for an additional 500k mortgage.

My wife and I make around 225k together.
A lot different than me. I have at $450k home with less than $300k mortgage remaining, and we have a combined income around $300k. We live in a low cost area with cheap property taxes.

I think, you might get approved. Lenders are generous. Check with your lender. No idea what it looks like with COVID now. But make sure you have enough cash to pay for all of this if you do get approved.
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defscott627
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Re: How do people sell a house and buy one at the same time?

Post by defscott627 »

rockstar wrote: Wed Jul 22, 2020 4:44 pm
defscott627 wrote: Wed Jul 22, 2020 4:37 pm
rockstar wrote: Wed Jul 22, 2020 4:36 pm Super interesting. I bought a new home without a contingency and sold my other home. I had enough income to be able to own both at the same time. That's what I did with my latest sale. I rented an AirBNB in between.

Are you buying too much house?
I'm in New York so I have to stretch the income to house price ratio. The place we're selling is 730k in contract. The place we are buying is around 750k. I have a 470K mortgage on the first place so I doubt I will be approved for an additional 500k mortgage.

My wife and I make around 225k together.
A lot different than me. I have at $450k home with less than $300k mortgage remaining, and we have a combined income around $300k. We live in a low cost area with cheap property taxes.

I think, you might get approved. Lenders are generous. Check with your lender. No idea what it looks like with COVID now. But make sure you have enough cash to pay for all of this if you do get approved.
We have the down payment + closing costs liquid. I would like to add the equity, as well, in my current property to put into the second property to keep the mortgage around 350k - 375k but obviously I can't use my equity until I close.
rockstar
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Re: How do people sell a house and buy one at the same time?

Post by rockstar »

defscott627 wrote: Wed Jul 22, 2020 4:51 pm
rockstar wrote: Wed Jul 22, 2020 4:44 pm
defscott627 wrote: Wed Jul 22, 2020 4:37 pm
rockstar wrote: Wed Jul 22, 2020 4:36 pm Super interesting. I bought a new home without a contingency and sold my other home. I had enough income to be able to own both at the same time. That's what I did with my latest sale. I rented an AirBNB in between.

Are you buying too much house?
I'm in New York so I have to stretch the income to house price ratio. The place we're selling is 730k in contract. The place we are buying is around 750k. I have a 470K mortgage on the first place so I doubt I will be approved for an additional 500k mortgage.

My wife and I make around 225k together.
A lot different than me. I have at $450k home with less than $300k mortgage remaining, and we have a combined income around $300k. We live in a low cost area with cheap property taxes.

I think, you might get approved. Lenders are generous. Check with your lender. No idea what it looks like with COVID now. But make sure you have enough cash to pay for all of this if you do get approved.
We have the down payment + closing costs liquid. I would like to add the equity, as well, in my current property to put into the second property to keep the mortgage around 350k - 375k but obviously I can't use my equity until I close.
Some lenders offer the option to do a recast on your mortgage after it starts, where you put down a couple of grand, pay a fee, and they redo your payment as if you just started. Ask your lender.
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Meg77
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Re: How do people sell a house and buy one at the same time?

Post by Meg77 »

I haven't read all the replies, but as a banker I can tell you that many lenders will approve you for the new mortgage if your current home is listed for sale, and especially if it's under contract already to be sold. So even if you end up with two mortgages for a month or two, a lot of lenders will let you close on the purchase if the sale hasn't occurred yet. This takes a bit of pressure off. I would get a couple of preapprovals or reach out to your bank to see how they usually deal with these situations.

A bridge loan is another option, but we don't use/see these as much anymore. Frankly it's a pain for the lender and you have to close twice so title is a headache (esp in NY). So a lot of lenders would rather just get you in the permanent mortgage from the get go. Either way they are stuck with the new loan if your existing house doesn't sell.
"An investment in knowledge pays the best interest." - Benjamin Franklin
FoolMeOnce
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Re: How do people sell a house and buy one at the same time?

Post by FoolMeOnce »

deltaneutral83 wrote: Tue Jun 23, 2020 10:13 am With a sizable taxable and short term funds needed to buy the new house and then subsequently sell the existing, a margin loan at Interactive Brokers can be advantageous.
Some of the other brokerages will give you a low margin rate if you ask, too. TD Ameritrade recently approved me for 2% margin rate for this type of purpose (though it would be to buy a house for my MIL who will pay us back when she sells her house). TDA asked what I wanted the margin for. Turns out we don't need it, because she is selling before buying and will rent.
Vogatrice
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Re: How do people sell a house and buy one at the same time?

Post by Vogatrice »

No one has responded to your question about borrowing from family members, so I will. I just did this with my 87-year-old parents. We bought a new home which closed 4 months before we closed on the sale of our existing home. I went to our existing HELOC holder to increase the approved amount to only 1/3 of the value of our paid off existing home. They wouldn’t do it because I had just retired. My parents offered to cover it for 4 months (I didn’t ask). We wrote up a promissory note, properly signed and witnessed, and they sent me the money. We informed my siblings about it and no one had any bad feelings. I paid it back as soon as the old house sale closed 4 months later.

There is nothing wrong with this if family dynamics are good. My family is not afraid to talk about money. We have multi-generational experience with this. My grandfather was a banker. My uncle was a banker. Everyone in my extended family has helped each other in this way since the Depression, but always with promissory notes, clear terms, and no guilt or emotional baggage.

Only you know if this will cause ugly feelings in your family. I don’t think it should, but people feel strongly about money and tie it up with old sibling rivalries or may judge each others' financial habits.

Edit: I would think twice if it would cause even temporary hardship for any of the family members. If you had to be late paying it back for any reason, would a note holder in this situation have trouble with their own bills?
mortfree
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Re: How do people sell a house and buy one at the same time?

Post by mortfree »

With a house being sold and under contract and a new home being purchased and under contract.

Pick a day that all parties agree on for closing.

Close on the house you are selling first. Then close on the house you are buying. All in the same day.

I was able to do this for my last transaction. Luckily everything went smoothly with the paperwork and it took maybe 2 hours since we did it back to back.

The movers showed up that morning. Emptied the old house. Took lunch. Then loaded everything into the new house that afternoon. I just needed family members to be at the new house to let them in and help while we were closing.
michaeljc70
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Re: How do people sell a house and buy one at the same time?

Post by michaeljc70 »

Many responses seemed to miss the fact that the OP said he cannot afford to carry both places at once (and probably not qualify for a loan to do so). What most people do is buy the new home contingent on the sale of the current home. Yes, you need to close the same day typically and it can be difficult to coordinate and is a hassle. I've done it a couple of times. The last time my stuff was on a moving truck for 6 hours until I closed on the new place (and I paid cash, but needed funds from the old house).
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