Home buying question

I am looking at buying a different property. I wasn't actively shopping, but a place that checked all our boxes, in a perfect for us location, within our price range came on to the market, which doesn't happen very often. Since I wasn't shopping I didn't have my ducks in a row, and I'm kind of dumb about the process.

Here is my question, if I buy this I have to sell my house, is the only option to have two house payments until it sells? If I get my loan from the same bank my current mortgage is with do they usually work with you on this, to make paying a little easier? It would be pretty tough making two payments for an extended period.

The new place has a four car garage.

Generally what I've seen is that you make an offer on the new place with a contingency in the contract on selling your old place. Price the old place to sell and off you go.

It depends upon your equity position with the current home, liquid assets and a whole bunch of other variables. But as a general comment, no - both mortgage payments would have to be considered in calculating your debt/income ratio and your ability to meet the ATR rules(ability to repay).

There are strategies to get the equity from a pending sale early for use as a down-payment, but it is much harder to disregard or subsidize one of the payments while you carry two home loans simultaneously (even if you have sufficient cash in reserve to make the payments for some period of time).

There are also issues with maintaining adequate insurance on the unoccupied property that is offered for sale.

If it is a property that will likely draw more offers, keep in mind that "Contingent" offers (based on sale of current place) will likely lose out.

I have carried 2 loans for a couple months before, and it is not fun.

Yep, Contingency contracts usually don't work around here. Friend of mine ended up selling his house and renting an apartment for 6 months because his "contingent on sale" contracts kept getting turned down.

I built a house as I was selling a house. Everyone said - no problem, you can get a bridge loan.

It was a problem and I didn't qualify for the 2 mortgages. So I quickly reduced my price and sold house #1 in order to free up my equity.

The best thing is to only own one house.

Banks are very leery about issuing a second first mortgage unless you have excellent income. We ran into this when we were buying a house for our daughter (long story). We had the income covered and the payments weren't a stretch for us. We've never missed a mortgage payment in 39 years and we still got the runaround.

Good luck

Interesting to hear how things work in the rest of the country.

In Las Vegas, buying a house on credit is essentially impossible now. Within 3 days (sometimes a lot less!) of going on the market, any house is sold for cash to a Chinese or Brazilian national, who has never seen the house.

I have several friends who are trying to buy houses on credit and simply can't. Sellers go for the fast cash deal 100% of the time.

Fwiw we're in the process of buying a house now, while we have a mortgage on another property(that we can't afford to sell). We do have great credit, but aren't flushed w/cash. None of the lenders have had any issue with us keeping the first mortgage while acquiring another for the new home.

We do have the existing house (re)financed as an income property - that we've never come close to turning a profit on - but it was our home for years prior. We also have our building where we currently live, and not once has a lender discussed using it as equity(not that it's worth much either).

It is eye-opening seeing the differences around the country.

Well I spoke to the bank and they gave me the green light for making an offer. I meet with the sellers tomorrow after work. My thoughts were to offer them just shy of the asking price (it really seems like a fair price) and in return ask that they pay closing costs and give us time to sell our current home. From what the bank quoted for a monthly payment on the new place we could pay for both but it would be awful tight. Does that sound like a reasonable offer? The seller is actually the children of the owner. She is a widow that is in the nursing home, and it sounds like the sale is to pay for her nursing care.

Sounds okay from here. Has it been on the market long?

Extended closing date may not be a deal killer for the seller if they can get it under contract.. and you are approved for the loan.

Don't forget inspection and appraised value contingencies, if those aren't automatic where you live.

EvanR wrote: Interesting to hear how things work in the rest of the country. In Las Vegas, buying a house on credit is essentially impossible now. Within 3 days (sometimes a lot less!) of going on the market, any house is sold for cash to a Chinese or Brazilian national, who has never seen the house. I have several friends who are trying to buy houses on credit and simply can't. Sellers go for the fast cash deal 100% of the time.

Wow. Bubble signs if I ever saw them.

If you own.. Sell before the music stops!!

They accepted our offer. I'm pretty excited. This place upgrades me in the following ways

Four car garage

Basement

Out in the country

Four car garage

Central air

A Mile from my parents

A much bigger buffer zone between me and my neighbors

And four car garage.

Now I just have to sell my house. Wish me luck.

Three four garages? Sweet pad .

Congrats!

Congrats!

OHSCrifle wrote:

EvanR wrote: Interesting to hear how things work in the rest of the country. In Las Vegas, buying a house on credit is essentially impossible now. Within 3 days (sometimes a lot less!) of going on the market, any house is sold for cash to a Chinese or Brazilian national, who has never seen the house. I have several friends who are trying to buy houses on credit and simply can't. Sellers go for the fast cash deal 100% of the time.

Wow. Bubble signs if I ever saw them. If you own.. Sell before the music stops!!

...again! Wasn't Vegas hit really hard in 2008?

We sold three houses in two countries to get into the one we have. I did get a bridge loan as part of it which was paid off in a month or two. Oddly, that's the one that caught the attention of all the junk mailers. But the bank (Wells Fargo, BTW) understood what was going on and we were able to make it work. We had one of the houses on the market with a pretty high price and we were able to take our time selling it instead of dumping it. That paid off.

Shoulda kept the Canadian house, it was in one of the hottest areas of the Ottawa market and the Canadian real estate market has been nuts for the last 7-8 years. It would have been worth more now than my current house is. So maybe you shouldn't listen to me...

Twice now I've had to make payments on two houses at once. Yes it sucks, but hopefully your old house is in a desirable enough area that it sells quickly. Places around here don't sit on the market long nowadays.

It's possible the bank may ask you for some equity proof (they may have a drive-by appraisal done of your current house) or they may want some cash reserves. You'll find out once it's in underwriting.

SOLD!!!! I am so happy that we were able to get it done so quickly. The realtor said the buyer will be using a VA loan. Is there anything special I should know about that?

In reply to gearheadmb:

Yes, we're going through the process of buying using a VA loan presently. While it's a great program, for you the seller the most important things to consider are 1.) The house needs to be move-in ready. 2.) The appraisal is thorough, almost to the point of being a separate inspection, and has set guidelines the property needs to meet, as listed here. 3.) If the buyer chooses to have a home inspection, the inspector finds any additional problems not caught by the appraiser, and the inspection report is forwarded to the lender(which is not required FYI), the inspection report has to be taken into consideration by the lender. However the buyer can choose to have an inspection, but not have it reported, if they want.

In reply to petegossett:

Awesome info. Thank you very much. I love the way I can get anything answered around here.