How to buy AND sell a house simultaneously

[Anonymous]

This scenario will be coming up in the next few years and can someone walk me through how this happens?

Currently own a house in a highly sought after district, will sell in a day or two irregardless of any economic situation. Am looking to move up. However, will only move when the right house appears. When that happens, I would have to sell current house to buy the next house. How does this work? I'm asking because to put an offer on the next house I would need to have a mortgage lined up for that property. But I already have an existing mortgage. Is this the scenario:

1. Talk to mortgage company and prequalified for a second mortgage that is hypothetically 10% down.
2. Right house comes up.
3. Put offer on house, accepted, and go into escrow
4. Sell current house
5. Close on new house, briefly carrying two mortgages, even if just on paper.
6. Close on old house, pay off existing mortgage, transfer equity balance to new mortgage.
7. Back to just one mortgage payment

Any steps I'm missing?

[Anonymous]

The risk of carrying 2 mortgages leads many people to make an offer contingent that they sell their existing house within a certain period of time.

Which is less desirable for a buyer. Most people buy too much house to handle 2 mortgages

[Anonymous]

Anonymous wrote:The risk of carrying 2 mortgages leads many people to make an offer contingent that they sell their existing house within a certain period of time.

Which is less desirable for a seller. Most people buy too much house to handle 2 mortgages

Correction.

[Anonymous]

That basically seems right.

Depending on the nature of the mortgages on each property, you might or might not want to bother actually recasting the new one -- when we bought and then sold six years ago, we were able to qualify for an 80/20 mortgage on the new house despite having a mortgage on the old one. So we just invested most of the proceeds of the sale once that closed.

I was not a huge fan of carrying both mortgages, even for just a few months, but it worked out fine in the end.

[Anonymous]

We are in a similar position. We have decided to rent for a year so that we can take our time deciding where to buy.

[Anonymous]

Prep your house to sell (declutter) now
Get pre approved contingent on old house selling
Find your new house, ask for further out close date
Sell old house, and ask for a short rent back period
Use proceeds to close on new house
Don’t try to close on the same day

[Anonymous]

We decided to rent for a year and ended up terminating the lease when we were under contract and closed. It gave us more flexibility.

[Anonymous]

If you're buying in a hot market, you will need to waive all contingencies including financing. If safest way to do this is to sell first and request a rent back so you can live in the old house while you house hunt the new one.

[Anonymous]

Thanks for the feedback. I'm going to have to explore this process more carefully.

I could probably pay off the existing mortgage outright by borrowing from the IRA Roth and closing out mutual fund. Then when I get the new mortgage on the new house I can pay back the IRA Roth? Seems like I have 60 days to do this.

Having no existing mortgage must make it easier for me to get a new mortgage for the new house.

[Anonymous]

Anonymous wrote:This scenario will be coming up in the next few years and can someone walk me through how this happens?

Currently own a house in a highly sought after district, will sell in a day or two irregardless of any economic situation. Am looking to move up. However, will only move when the right house appears. When that happens, I would have to sell current house to buy the next house. How does this work? I'm asking because to put an offer on the next house I would need to have a mortgage lined up for that property. But I already have an existing mortgage. Is this the scenario:

1. Talk to mortgage company and prequalified for a second mortgage that is hypothetically 10% down.
2. Right house comes up.
3. Put offer on house, accepted, and go into escrow
4. Sell current house
5. Close on new house, briefly carrying two mortgages, even if just on paper.
6. Close on old house, pay off existing mortgage, transfer equity balance to new mortgage.
7. Back to just one mortgage payment

Any steps I'm missing?

This is exactly what we did. We decided that it was less expensive and logistically easier to carry two mortgages than to rent because the original mortgage rate was 2.7% and the balance was low. Of course, the balance on the new mortgage is higher than we wanted until we freed up equity. We worked with an experienced mortgage broker who found us a mortgage that we could recast when the old house sold. We got a floating rate on the new one, betting rates will go down. One of us works in this industry on the commercial side.

[Anonymous]

Anonymous wrote:The risk of carrying 2 mortgages leads many people to make an offer contingent that they sell their existing house within a certain period of time.

Which is less desirable for a buyer. Most people buy too much house to handle 2 mortgages

No seller is going to entertain such a contingency right now in the DC area.

[Anonymous]

Anonymous wrote:Thanks for the feedback. I'm going to have to explore this process more carefully.

I could probably pay off the existing mortgage outright by borrowing from the IRA Roth and closing out mutual fund. Then when I get the new mortgage on the new house I can pay back the IRA Roth? Seems like I have 60 days to do this.

Having no existing mortgage must make it easier for me to get a new mortgage for the new house.

Ask your lender about a bridge loan.

[Anonymous]

When we sold and bought in 2022, we put our house on the market the weekend after we went under contract on the new house. It went pending in a few days, so we only had a few weeks of two mortgages. With that said, our first property only had a $300k mortgage. Our new mortgage is more than twice that, so when we move again we will likely sell and then rent because we're way too risk averse to have two large mortgages at once.

[Anonymous]

This is what we did:
1. We got prequalified for a mortgage with 10% down (we had the 10% available in cash).
2. We bought a new house and moved in
3. We sold our old house and were fortunate enough to be able to close very quickly.
4. We recast our loan to put in the cash from the sale of our old home and this reduced our monthly payments.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This scenario will be coming up in the next few years and can someone walk me through how this happens?

Currently own a house in a highly sought after district, will sell in a day or two irregardless of any economic situation. Am looking to move up. However, will only move when the right house appears. When that happens, I would have to sell current house to buy the next house. How does this work? I'm asking because to put an offer on the next house I would need to have a mortgage lined up for that property. But I already have an existing mortgage. Is this the scenario:

1. Talk to mortgage company and prequalified for a second mortgage that is hypothetically 10% down.
2. Right house comes up.
3. Put offer on house, accepted, and go into escrow
4. Sell current house
5. Close on new house, briefly carrying two mortgages, even if just on paper.
6. Close on old house, pay off existing mortgage, transfer equity balance to new mortgage.
7. Back to just one mortgage payment

Any steps I'm missing?

This is exactly what we did. We decided that it was less expensive and logistically easier to carry two mortgages than to rent because the original mortgage rate was 2.7% and the balance was low. Of course, the balance on the new mortgage is higher than we wanted until we freed up equity. We worked with an experienced mortgage broker who found us a mortgage that we could recast when the old house sold. We got a floating rate on the new one, betting rates will go down. One of us works in this industry on the commercial side.

Oh dear, good luck with that. When we bought last summer everyone was telling us that in 6 months mortgages would be back down to 5%. That clearly did not happen.