Need to downsize but can't get mortgage.....should I look into a hard money loan?
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avalonrose
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The past few years have been rough and my husband has had to job hop (he's in sales). We're struggling financially and want/need to downsize into a smaller home, but to get a mortgage you have to have to have two years of the same employment PLUS have a good credit score...neither of which we have, unfortunately.
What we're looking for in our desired area is a unicorn and only a handful of houses come up on the market each year that we would consider. If we sell before purchasing another we will have no where to go. We own 100% equity in our current home, so we're what you would consider extremely house poor. House is worth about 1.1.mil Would you recommend getting what they call a "hard money loan" based on the equity of the house instead of income? If so, who is the best company to work with? |
Anonymous
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Why complicate your life. Rent for a year or two. Fix your financial situation and then buy. Renting should also save you tons of money.
Renting is not throwing money away. I sold three properties and retired. I'd be house poor and still paying the mortgages if I hadn't sold them. |
Anonymous
| Sell your house and then rent! 100 percent. |
avalonrose
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| We don't want to rent and have to move twice. We're still young and have kids...we want a yard, etc. We owe nothing on our current home...it's all paid off, so I would rather put that money into buying a house. I realize I maybe didn't explain the situation clearly. We are finding ourselves unable to buy a house without selling the one we own first, and we can't get a bridge loan because of our income situation. We're trying to find some kind of loan that is based on our home's equity and not our income. Anyone done anything like that before? |
Anonymous
| Wait? You own your house outright? but you think having a mortgage or renting is going to be more economical? What am I missing? |
Anonymous
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OP, we're underemployed too, with assets stuck in our house. If we sell, we accept that we'll have to rent temporarily. This is what lots of people do. Do you not have enough salary/credit score to rent? I imagine that this might be a problem for renters as well.
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Anonymous
| We were in the same boat and ended up paying cash for our new house. I'm sure it was not the best move financially but it is a relief not to have a mortgage. You can do a hard money loan but typically you end up just paying some crazy amount of interest (10%) and not paying down the principle. |
avalonrose
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See above...I edited my post.
Yes, we own the home outright. The upkeep on it is getting a little bit much, as it's a large house. We need to buy a smaller one for about 850, and we intend on making a profit. But we can't buy a home without selling ours first, because no lender will give us an 850k loan to purchase a new house before we sell the home we're in now due my husband's current income level. So, I was asking if anyone had done a hard money loan, or some other kind of loan that is determined on the home's equity and not on income. |
Anonymous
| What we did is we sold and rented back for a few months until we found a new home - you could do that, no? |
Anonymous
| You have no other assets beyond the house? |
avalonrose
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We could do that but I'm afraid we'd be forced to purchase a house we weren't in love with. |
Anonymous
| This is a very common situation for a lot of people. You sell and rent back for a few months until you buy a new house. I'm not sure the upkeep on a $850,000 property is going to be substantially less than what you have now, however. |
Anonymous
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Just sell first, then buy. Find a short term rental while you move and close on buying new home with cash.
How are you house poor if you have no mortgage to begin with??? |
Anonymous
Maybe they want to downsize so they can use some of the money that is now tied up in the house? I am only guessing here, but it may be that they are in a tight financial situation and selling the 1.1 million house and moving to say a 700K house will give them some money to pocket. They would be paying cash for the downsize house so no mortgage. |
Anonymous
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Sell the house under the condition that you can rent back for several months. It might cost you something to do this. |