vzdude

O.K......I'll try to make this as short as possible. I have my current house for sale, and the house of my family's dreams is coming up for sale SOON! I have about 55% equity in my house and am considering trying to get this other house even though mine has not sold yet. What kind of a loan can I get in order to accomplish this? I just really don't want to let this other house get away from us. I know we are in a tough market, and it may take some time to sell mine. I can swing the payments for 2 houses, but heat and such may make things tight! I also think if our current house were empty, it may be easier to sell....Thanks for any advice!

BlackSunShyne

Do you have any down payment (equity) to put into the dreamhouse purchase? Other than the equity from the proposed sale of the house? That is always helpful.

You may be able to do a bridge loan. Or a short term interest only loan on the new house, with the understanding (a written conract) saying you will convert the bridge loan over to a 10, 15, 20, 30 etc... amortized home loan upon the sale of your exisiting home. I doubt the larger banks (ex: BoA, Wachovia, etc.) will be very willing to do this, especially in the current market. This loan will be much easier to obtain if you are using a smaller 'community' bank, and have a good relationship with your lender.

Of course doing this is a very bad move financially, but if it is a once in a life time type home the risk may be worth the reward. But just remeber when you gamble sometime you lose.

Hope you do what works best for your situation.

Jeff in TD

Some banks will let you rework the payment terms in a loan.

When your old house sells, you could pay down the balance of the new mortgage and adjust the payment accordingly. A buddy of mine just did that. I think the contract limited it to one reworking over the life of the loan. Other banks might charge a fee.

Anyway, if I were you I think I'd go shop around for the best fixed rate you can find, and go talk to a lender about what you want to do. Hopefully the mortgage broker can point out in the contract what their policy is on redoing the terms.

chipmonk

iirc, there is something called a bridge (?) loan, which might let you have both homes under the same loan. you can also get an interest only loan on your new house, with your choice of fixed rate term (30 days-15 years), which will only require you to pay the interest (although you can pay as much additional principal as you want, with your interest payment), so your minimum payment can be relatively small while you're waiting for your house to sell. several years i did the same thing that you are trying to do, so feel free to shoot me a pm with any questions.

vzdude

Without draining my 401K ( Not in my interest! ) I really don't have a substantial amount to put down on the new house. Bridge loan is what I was trying to think of. I know it's risky, but to understand the situation more....I want a country home, and the wifey wants in town . This house has over an acre of land, backs up to a farm field, and neighbors are'nt close like most town homes. This house would be about the closest compromise that we would both be happy with. Not so much that the house itself is a mansion or anything, but the location for us is prime. I'm gonna talk to the banker tomorrow about the bridge loan. Some people owe more on their trucks than I do my house right now, so I hope we can work something out! Thanks for all the info guys!

Grit Dog

I think bridge loans crank you on the interest rate, not sure though.
One way to do it would be to take out a 1st mortgage for whatever amount you expect to carry after you sell your current house. Then, take out a 2nd mortgage for the balance of what you owe. The 2nd will be a percent or 2 higher interest and should only cost you 1% origination, or nothing at all if they're eager to loan you money which isn't the case so much anymore (title work and all the other costs are part of your 1st mortgage).
Then when you sell your old house, payoff the 2nd with no penalties.
I've done this twice now and it appeared to me to be the least costly way to get into a new house before selling the old one.

vzdude

I was hoping that a bridge loan would help keep the payments realistic. Your method seems to be the easiest and makes the most sense, but would carry the highest payments. Still waiting for the bank to call me back

jumper

You can probably take out a loan against your 401(k) through the plan administrator. In fact there seems to be a move afoot to encourage this practice. Its a BAD idea if you're headed on a cruise with the money, but a case can be made that its OK as a bridge loan that you'd pay back upon sale of your current home. You want to be sure your job's secure, as I think the loans are callable if you lose or change jobs. That would add insult to injury and be sure to investigate the terms of course.

In the alternative, is there any chance the seller will carry back a bridge loan of sorts for you? Or, maybe your current house in town is that country mouse's dream house and you two can trade.

vzdude

The new to purchase home is actually in forclosure. Probably can't get any deals with the owner......he might be interested though.......I wouldn't be! LOL

chipmonk

if your credit is good, you should not have to pay a 1% origination. as long as you get your loan directly from a lender (mortgage co., bank, credit unoin, etc.) and not from a broker. the only fees you should have to pay are the actual closing costs (title fees, taxes, appraisal, etc.).

Hoss

He might be more interested than you think. If the home is being foreclosed on then obviously the current owner is in a bind. It could be to his benefit if he sold the home before the foreclosure. Also, keep in mind that if it goes into foreclosure then you are going to have to bid on it against other interested buyers. You get one shot at that and if you're not the high bidder you don't get the house.

I have a friend that does very well buying homes from owners in pre-foreclosure. On more than one occasion he has bought homes at a great price only to turn around and lease it to the former owner for a profit. I know that's not your goal, but the point is that they might be more interested in a deal than you think.

vzdude

Hoss....great idea! It's kind of a touchy situation actually. I kinda know the owners, and they haven't mentioned it being forclosed on. I also know the local LEO who actually told me he went there with the realtor handling it to tell them the date they were to be out. I called the realtor and she said that the mortgage company was going to put it on the market for a month or so to "test the waters". She wouldn't / couldn't give me any numbers for a couple of weeks either. Maybe I'm jumping the gun and maybe the owner will get it straightened around? I want to ask him, but scared how it will end up.......

Jeff in TD

One would think that if the current owners had any hope of selling the place for what they owe, they would have done so before the foreclosure process got so far.

If you talk to the owner, I suppose you could start by beating around the bush... just mentioning that you are considering moving or something, and see how he responds?