Comments on: What type of mortgage to get when buying new house before selling old one? http://sellmyhousequicklytm.com/what-type-of-mortgage-to-get-when-buying-new-house-before-selling-old-one Sell house by owner. How to sell your own house. Thu, 22 Sep 2011 00:00:27 +0000 hourly 1 http://wordpress.org/?v=3.1.4 By: calofficer http://sellmyhousequicklytm.com/what-type-of-mortgage-to-get-when-buying-new-house-before-selling-old-one/comment-page-1#comment-521 calofficer Sun, 22 Nov 2009 12:41:38 +0000 http://sellmyhousequicklytm.com/what-type-of-mortgage-to-get-when-buying-new-house-before-selling-old-one#comment-521 Allow me to break it down for clarity: You have a $300,000 equity on your current home that is obviously not liquid as of yet; a $60,000 cash in hand (10%), a $30,000 HELOC that is still unused - which, if you take a closer look should you do decide to use it all, will deduct out from your $300,000 home equity. You want to purchase a $600,000 home and is looking for a $250,000 loan. First of all, you need to have $350,000 CASH IN HAND in order for you to get a $250,000 loan. I'm answering this based on your question and your preferred loan figure. Basic math 101, would tell me that your $30,000 HELOC is out of the question; that you need to sell your house first so you can get your $300,000 cash; and add $50,000 from your cash reserves, leaving you $10,000 toward your closing costs and cash reserve requirements. NOW ADDRESSING YOUR $600,000 PURCHASE PLAN... Obtain a 100% financing (80/20), use your $60,000 (or 10%) as cash reserves in addition to closing costs and pre-paid items. After selling your home with the $300,000 equity, you can then use your sales proceeds to pay down the balance of your $600,000 new loan. Just make sure that your new loan doesn't have any pre-payment penalty, otherwise, you'll be paying an arm and a leg on fees that are not necessary. Allow me to break it down for clarity:

You have a $300,000 equity on your current home that is obviously not liquid as of yet; a $60,000 cash in hand (10%), a $30,000 HELOC that is still unused – which, if you take a closer look should you do decide to use it all, will deduct out from your $300,000 home equity.

You want to purchase a $600,000 home and is looking for a $250,000 loan.

First of all, you need to have $350,000 CASH IN HAND in order for you to get a $250,000 loan. I’m answering this based on your question and your preferred loan figure.

Basic math 101, would tell me that your $30,000 HELOC is out of the question; that you need to sell your house first so you can get your $300,000 cash; and add $50,000 from your cash reserves, leaving you $10,000 toward your closing costs and cash reserve requirements.

NOW ADDRESSING YOUR $600,000 PURCHASE PLAN…
Obtain a 100% financing (80/20), use your $60,000 (or 10%) as cash reserves in addition to closing costs and pre-paid items.

After selling your home with the $300,000 equity, you can then use your sales proceeds to pay down the balance of your $600,000 new loan. Just make sure that your new loan doesn’t have any pre-payment penalty, otherwise, you’ll be paying an arm and a leg on fees that are not necessary.

]]> By: paleblueshoe http://sellmyhousequicklytm.com/what-type-of-mortgage-to-get-when-buying-new-house-before-selling-old-one/comment-page-1#comment-520 paleblueshoe Sun, 22 Nov 2009 12:41:38 +0000 http://sellmyhousequicklytm.com/what-type-of-mortgage-to-get-when-buying-new-house-before-selling-old-one#comment-520 I wouldn't do a HELOC on your existing house because of the closing costs, possible early termination fees, and because some banks do not permit funds from a HELOC to be used as a down payment on another property. I think you should inquire about a "bridge" loan. That kind of loan can be a 'single payment' loan which does not need a payment for, say, 3 months, and then is due in full. If you've got a good relationship with your lender, you can 'roll' that loan over if your old home hasn't sold within the three month period. If your home does sell within that period, you'll pay off the bridge loan with the proceeds. I wouldn’t do a HELOC on your existing house because of the closing costs, possible early termination fees, and because some banks do not permit funds from a HELOC to be used as a down payment on another property. I think you should inquire about a "bridge" loan. That kind of loan can be a ‘single payment’ loan which does not need a payment for, say, 3 months, and then is due in full. If you’ve got a good relationship with your lender, you can ‘roll’ that loan over if your old home hasn’t sold within the three month period. If your home does sell within that period, you’ll pay off the bridge loan with the proceeds.

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