More questions on how to buy and sell houses at the same time

[JustMe]

So, I posted before on this and got some helpful responses. Things have proceeded, and I am almost ready to put my house on the market; hopefully in 2 weeks, if the contractor gets things done close to when she said she would. I saw a house today that would be a great fit; so far it has been slim pickings as far as anything that would be a good fit.

I asked my broker for the numbers breakdown of buying first, using some money for a down payment, and then when my house sold putting more towards the downpayment vs how much it would be if I sold my house first, then had a larger amount for a down payment. It was a $9000 difference! That is a lot to me. She said I would need to do the first scenario (if I buy first) by taking out a 30 year loan, then changing it to a 15 year (which I want). The second scenario is just a straight 15 year loan (which I want).

Does anyone know of any other way to get a short-term loan that wouldnt be so expensive? Also, does anyone know if the credit union I talk to would insist on doing a credit check on me before even giving me quotes? Just dont want to have too many credit checks done so my credit score doesnt get lowered, but wondering about just going in and talking to my credit union to see what they suggest.



Problem with selling first, then buying is I might not find something in time. We have no family nearby, and finding a short-term rental would be hard (but probably doable, not really sure).

[ha98ed14]

I'd look into getting a bridge loan to get the down payment to buy something before your own house sells. Then you can pay it back when your current house sells. They have a higher interest rate, but it is very short term.

[JustMe]

I'd look into getting a bridge loan to get the down payment to buy something before your own house sells. Then you can pay it back when your current house sells. They have a higher interest rate, but it is very short term.

Thanks. So, I have done some reading on bridge loans on-line. What kind of companies can I get one from? It doesnt seem like my mortgage broker does this, as I specifically used that term and she presented me with this option where I get one kind of loan, then change it into the other kind once I sell my house. I would love to get some kind of idea of how much bridge loans actually cost to see how they compare.

[o_mom]

I am not sure the exact scenario your broker was envisioning. When we moved last, we had our house on the market first and had accepted an offer before we started looking. I was looking on line, but we had no idea how long it would be to sell so I didn't want to get attached to anything. We closed on the new house about 10 days ahead of closing on the sale of our old house. We ended up taking out a home equity loan on the old house to fund the down payment on the new house. Then that HEL was paid off at the closing of the old house.

We also were able to make a large payment on the new house once we had the remaining equity from the old house and they re-amortized the loan to change our payment without refinancing (ETA: even if we refinanced, it would be less than $350 in closing costs).

So, I guess it depends on how much equity you have in your current home. Do you have enough to be able to do a HEL and put 20% on the new house?

I am really surprised by a $9000 difference in cost either way unless there are some high closing costs, they are looking at a long period of owning both homes, or something else going on. We basically paid interest on the HEL for the 10 day period and that was it. Even over a longer period, the interest costs were not that much.

[JustMe]

So, I guess it depends on how much equity you have in your current home. Do you have enough to be able to do a HEL and put 20% on the new house?

I am really surprised by a $9000 difference in cost either way unless there are some high closing costs, they are looking at a long period of owning both homes, or something else going on. We basically paid interest on the HEL for the 10 day period and that was it. Even over a longer period, the interest costs were not that much.

Yes, I do. I am very interested in this option. I have read about it on-line and it seems like the only way to do it is to not tell the bank/credit union that you plan to sell? It says they dont like doing it for short-term, as they dont make money.

I think I would like to go into both of my credit unions and see what they can offer me. The question is do I tell them I'm selling of not? Is that even a choice now that a mortgage broker has run a credit check on me?

The broker told me I would have to take out a mortgage based on what I could put down before I sold my house, then pay it down/change to a 15 year loan (the change to 15 year loan being my choice). I am hoping there is a better option than this.

Btw, I do have a copy of my credit scores. I am going through recent papers, and found it. I forgot that the broker has given me a copy--so that problem is solved

[o_mom]

Our bank had no trouble with this - they knew we were under contract to sell and that we would be closing the HEL within two weeks because they were lending us the money for the new house. I don't know that every bank is as helpful. I do think it helped that our bank actually holds the loans, they don't sell them, so they knew they would get our mortgage long-term to make money on the deal. For a broker who will sell your loan within a month, they may not be as helpful. The CU may be a good place to try. I'm not sure how they would view it.

[JustMe]

Thanks for the info, sounds like a good thing to try!

[crispychicky]

Why not get a 30 year mortgage and pay it off as if it were a 15 yr mortgage? Money above the 30yr payment gets applied toward the principle. Run the numbers to see if it makes sense for you. The interest rate between the 15 & 30yr are a bit different. You wouldnt have to pay to refinance to a 15 yr mortgage. Check with the lender too to make sure they are no fees for early payoff.

[KrisM]

We had no mortgage on our old house. We bought first and sold second when we moved to our current house. Here's what we did.

We took a HELOC on the old house to cover the down payment.
We took 2 mortgages on the new house - one that would be our "keeper" mortgage and one that was the remaining equity in the old house.
We moved and put the old on the market. It sold and we closed. At closing, the HELOC on the old was paid. Then, we got a check for the remaining equity, less fees. We wrote a check to pay off the second mortgage on the new house. We ended up with one 15-year mortgage.

[DualvansMommy]

We did a bridge loan when we were trying to sell our condo and buy our bigger forever home. Our bank worked really well with us to do that, via our investment firm recommendation who then vouched for us to the bank.

Otherwise if we couldn't get a bridge loan, we were planning on taking large HELOC on the condo (mortgage only had 10k left till payoff) as our large down payment with new house.

[JustMe]

We took a HELOC on the old house to cover the down payment.
We took 2 mortgages on the new house - one that would be our "keeper" mortgage and one that was the remaining equity in the old house.
We moved and put the old on the market. It sold and we closed. At closing, the HELOC on the old was paid. Then, we got a check for the remaining equity, less fees. We wrote a check to pay off the second mortgage on the new house. We ended up with one 15-year mortgage.

This sounds great! So, it was cheaper to pay for the closing costs, etc, of a 2nd mortgage rather than to just pay down one loan?

[KrisM]

This sounds great! So, it was cheaper to pay for the closing costs, etc, of a 2nd mortgage rather than to just pay down one loan?

I don't remember the numbers, but it wasn't much. We kept a $100k mortgage and the second was $120k. So, if we just had one, it would have been $225k. We could swing payments short terms on all that, but did not want to just pay it down by $120k and have the double sized payments still.

[egoldber]

We took 2 mortgages on the new house - one that would be our "keeper" mortgage and one that was the remaining equity in the old house. We moved and put the old on the market. It sold and we closed. At closing, the HELOC on the old was paid. Then, we got a check for the remaining equity, less fees. We wrote a check to pay off the second mortgage on the new house. We ended up with one 15-year mortgage.

:yeahthat: Getting a second used to be very common. I haven't bought a house this way in awhile, but it used to be very standard. It may be somewhat regional.

[khm]

:yeahthat: Getting a second used to be very common. I haven't bought a house this way in awhile, but it used to be very standard. It may be somewhat regional.

Yeah, they clamped down on it for awhile, but I think it is making its way back into common-ness now. In my market, at least.

This is all just SO depended on your own area. Regional differences, norms and policies in real estate and mortgages are just huge. Each area has its own quirks, its own set of things that can / are more likely to go wrong, etc.