Moving to a new house when we already own a house

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't mean to be a Debbie downer but can you qualify for a $480k loan on a HHI of $150k? And would you want to? The $480k loan is assuming you add all of your cash to your $250k equity for a down payment.

So our mortgage payments would be about 3k a month but we take home close to 6k a month after benefits, tax and retirement contributions. We have no car payments or other debt. We also have no daycare costs (I sahm). So it gives us 3k a month to live on which I feel like we can do. We have excellent credit. So we won't be buying bmws, but we will be ok.

That said I don't know if we would qualify. When we bought 4 years ago, we qualified for 750k and had a HHI of 125k. So I feell like we might?

Amything our th sells for over 600 would reduce our note on the future property...so maybe the note would be smaller.

If you try to qualify for a new loan while you are still carrying the current one, you will be way over the debt/income ratio limit.

[Anonymous]

The community banks will do bridge loans if you have good credit. They'll look for about 40% or less debt to income.

[Anonymous]

If you're not on a tight timeline, you could do a HELOC on your current place, and use the equity from that. Only issue is that you'd need to qualify to hold the HELOC, current mortgage and new one. Could be tight.

[Anonymous]

We took a loan on our retirement, plus a second note. Bought new house last early last March, moved, listed old house abt two weeks later, lucked out and got many offers including a clean one (no financing, no appraisal, no inspection) and closed before we had a month of double mortgages. And then immediately repaid the second note and retirement loan.

[Anonymous]

Anonymous wrote:I'm kinda with Debbie Downer on this one. With these numbers your ratio of take home to PITI is double what I would be comfortable with. Maybe you are privy to some information that changes the equation down the line, but I'd be careful about the whole house poor thing. It's no fun sitting in your mansion eating ramen noodles sitting on the papasan chair from your dorm room in undergrad. Also, you'd need to build up a large emergency savings account really quickly since you are a bit extended on the house with only one income and a family of 5.

So fwiw, only one of the kids is ours. We are taking care of somebody else's kids and receive about 30k a year to do this (think like foster care/temporary custody arrangement). But we don't include this in our hhi because it's more of a stipend? But we don't pay taxes on it because it's classified as a stipend. But it won't last forever so I don't want to count on it (children may be able to go live with their mother again one day). The takeaway is that I am only financially supporting one kid.

I wish I could call this house a mansion think slightly larger bungalow.

So I waffle back and forth between the Debbie Downers and that a 3k/month mortgage is too much and looking at our finances and feeling like we could totally find an extra 12-15k in our budget a year to make the new mortgage work. Thank you for all the help! We are working with a broker and are going to try and sell our house quickly if the offer is accepted.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm kinda with Debbie Downer on this one. With these numbers your ratio of take home to PITI is double what I would be comfortable with. Maybe you are privy to some information that changes the equation down the line, but I'd be careful about the whole house poor thing. It's no fun sitting in your mansion eating ramen noodles sitting on the papasan chair from your dorm room in undergrad. Also, you'd need to build up a large emergency savings account really quickly since you are a bit extended on the house with only one income and a family of 5.

So fwiw, only one of the kids is ours. We are taking care of somebody else's kids and receive about 30k a year to do this (think like foster care/temporary custody arrangement). But we don't include this in our hhi because it's more of a stipend? But we don't pay taxes on it because it's classified as a stipend. But it won't last forever so I don't want to count on it (children may be able to go live with their mother again one day). The takeaway is that I am only financially supporting one kid.

I wish I could call this house a mansion think slightly larger bungalow.

So I waffle back and forth between the Debbie Downers and that a 3k/month mortgage is too much and looking at our finances and feeling like we could totally find an extra 12-15k in our budget a year to make the new mortgage work. Thank you for all the help! We are working with a broker and are going to try and sell our house quickly if the offer is accepted.

Well, the problem is, it's almost impossible to buy a house in this area without going over the standard "3 times your salary" advice if you're making 150k. We have the same HHI as you OP. I am hoping to finance no more than 450k on our next house which is pretty similar to the numbers you're taking about. Depending on interest rates when we buy in a couple of years, I also think it's within our budget (albeit the high end). Would I like to pay less? Yes. But house prices here are ridiculous.

[Anonymous]

OP, a couple of things:

First, obviously you either need to sell and buy simultaneously or else sell first with rent back and buy immediately after. Both are very common in the DC area market and won't be a problem. Never quite as competitive as an uncomplicated sale or purchase, but not a problem.

Second, max debt service (includes property tax and insurance) to gross income is 42 or 43 percent but most lenders can go to 45 if credit is good. You can easily qualify for the loan for the $800k place, once you sell your current place.

I do not understand why this is complicated. Your situation is very typical for many buyers looking to trade up. Were you hoping to keep your current place as a rental? That's another story.

[Anonymous]

Anonymous wrote:OP, a couple of things:

First, obviously you either need to sell and buy simultaneously or else sell first with rent back and buy immediately after. Both are very common in the DC area market and won't be a problem. Never quite as competitive as an uncomplicated sale or purchase, but not a problem.

Second, max debt service (includes property tax and insurance) to gross income is 42 or 43 percent but most lenders can go to 45 if credit is good. You can easily qualify for the loan for the $800k place, once you sell your current place.

I do not understand why this is complicated. Your situation is very typical for many buyers looking to trade up. Were you hoping to keep your current place as a rental? That's another story.

Hi thanks. I'm starting to see the simplicity- I think I just got confused with all the talk of the rent back, bridge loan, heloc and ppl that moved to a rental after selling their place. We are happy to sell the th. Credit scores are 792 and 781 for me and DH.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hi,
Thanks for the responses. I'm worried that an offer with contingencies would be laughed at but maybe not?

I don't have enough for the dp and get conflicting information on bridge loans. We have three children, so the idea of moving into a rental and then in another house is overwhelming. I'd have to be a lot more unhappy living in the th before I did that.

I'm also concerned that the bank wouldn't approve us for financing for the second note while we are holding the first note. Hhi of 150k. Current note is 350 with mortgage payments of 2200/month.

DH is optimistic that the will sell for more but I'm not so sure as it's smaller (1700 sq ft) and no garage.

Thank you!

Unless you are in South Arlington or are in a two bedroom, 2 bath, I'd think that the townhouse must be worth closer to at least $700k.

TH no garage? Are these one of those 1940s townhouses over near Washington blvd? Or is it condo th? Either way $600k Probably about right.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Hi,
Thanks for the responses. I'm worried that an offer with contingencies would be laughed at but maybe not?

I don't have enough for the dp and get conflicting information on bridge loans. We have three children, so the idea of moving into a rental and then in another house is overwhelming. I'd have to be a lot more unhappy living in the th before I did that.

I'm also concerned that the bank wouldn't approve us for financing for the second note while we are holding the first note. Hhi of 150k. Current note is 350 with mortgage payments of 2200/month.

DH is optimistic that the will sell for more but I'm not so sure as it's smaller (1700 sq ft) and no garage.

Thank you!

Unless you are in South Arlington or are in a two bedroom, 2 bath, I'd think that the townhouse must be worth closer to at least $700k.

TH no garage? Are these one of those 1940s townhouses over near Washington blvd? Or is it condo th? Either way $600k Probably about right.

1980s town house, brick. And yes by Washington blvd and the "v" streets

[Anonymous]

Fico scores of 790 or credit scores? there is a big difference between the two. also the 125 HHI included the stipend? no bank is going to care about anything thats not on a W2 / tax transcript

[Anonymous]

Anonymous wrote:Fico scores of 790 or credit scores? there is a big difference between the two. also the 125 HHI included the stipend? no bank is going to care about anything thats not on a W2 / tax transcript

Credit scores. How do I get a fico score?

Hhi of 150k does not include the stipend.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Fico scores of 790 or credit scores? there is a big difference between the two. also the 125 HHI included the stipend? no bank is going to care about anything thats not on a W2 / tax transcript

Credit scores. How do I get a fico score?

Hhi of 150k does not include the stipend.

DH is saying that the credit scores came from the mortgage lender and that they are fico scores?

[Anonymous]

I did this in the Spring of 2005; well the market shit the bed and the house I had, which was appraised at 850k, took two years to sell for 715k.

So, all the folks telling you to take a bridge loan are they going to make the payments for you ?

You can't predict or control tomorrow. You will owe the total amount of debt for as long as it takes to sell one or more of the properties. Real Estate is not liquid nor can you sell part of it - its all or nothing.

I am not advising you what to do - only that things that look risk free on paper seldom are....

[Anonymous]

PP here. And bridge loans are short term paper usually. So, if you need to refinance the note you are going to get hit with an additional round of fees/closings.

And again for everyone telling you its how its done - raise your hand if had real estate that needed to be refinanced in the fall of 2008/early 2009. It was a proctology exam.