How to buy a house without a contingency of selling our current home

[Anonymous]

OP: Wow, you have A LOT of savings, etc., for your HHI. That's awesome! Especially if you HHI was $100k until recently.

Do you mind if I ask how you got there? Family gifts? Living well, well below your HHI?

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Only just found the thread again as out was erroneously moved to real estate. It's a money question and I'm asking for it to be moved back.

I'll look into this. I thought 401k loans were limited to a small amount, like 50k. We'll need to find a way to borrow soothing like $800k, at least temporarily, then have a mortgage of about $150k.

To the PP who suggested the contingency, you missed the point. To buy in our target neighborhood, routinely all contingencies are waived.

Why do you need 800K? You only need enough for the down payment (I am assuming 20% or so), and you would get a mortgage for the rest, right? I don't see why you would not get approved for a 660-700k mortgage, considering you have that much equity in your curent home. 800K in your 401k would certainly be enough to borrow sufficient funds for your down payment.

No, before selling our current home we'd need to come up with the full purchase price. Once we've sold our current home we'd plan to have a mortgage in the $100-200k range. We can't afford monthly payments on a 660-700k mortgage and signing up for a 30 year mortgage for that amount (even if we can qualify for it, which I assume we can't due to our salaries not supporting the repayments) for a few months while we sell our home does not make any sense.

[Anonymous]

Anonymous wrote:OP: Wow, you have A LOT of savings, etc., for your HHI. That's awesome! Especially if you HHI was $100k until recently.

Do you mind if I ask how you got there? Family gifts? Living well, well below your HHI?

Mainly due to buying our house for $190k in 2002 as a foreclosure in a sketchy neighborhood that is now very popular and expensive. (Though have spent about $200k renovating in total over the years). That's kept our mortgage very low leaving us with very low expenses. Also had flexible schedules so avoided paying for daycare and don't have student loans. Then consistent max savings into retirement and an inheritance of about $250k in 2014. And massive sock market growth in the past year or two has added a couple of hundred thousand more. We've been lucky.

[Anonymous]

Is the house you are selling in a desirable area, too? If you think you can price it well and get it under contract quickly and easily, I'd go with listing it first and trying to find a buyer that will then let you rent back for 60 days. It's also a huge pain in the ass, but you could move into temporary digs while you list and sell your current place (stage it to look awesome and pay for that temporary housing), then figure out the next step. Moving twice and storing stuff might not be ideal, but it could certainly alleviate other pressures.

[Steve]

You could use one of those iBuyers (instant buyers) if what you're looking for is a sure thing. You'll get less money on your home sale but you won't have to risk losing out on the house you want to buy. You can basically look like a cash buyer but take out a mortgage.

[Anonymous]

Sell your house first. If it's in a desirable area, you can insist on a rent back period. That, and a 45 day closing period, will give you more than enough time to find a new house. Worst case scenario, you live in temporary housing for a short time.

I am unclear why this obvious solution eludes you.

[Anonymous]

Anonymous wrote:Borrow from your brokerage. It's called a margin account and you dont have to sell the stock.

NP (who bought last year)... We have over $550K in ours (big name like T Rowe Price) and when I called them they said they don't do this sort of thing.

[Anonymous]

Rent back.
We allowed our sellers to rent back with no problems. They were lovely people. The house was in great shape when we took possession.

[Anonymous]

Anonymous wrote:OP here. Only just found the thread again as out was erroneously moved to real estate. It's a money question and I'm asking for it to be moved back.

I'll look into this. I thought 401k loans were limited to a small amount, like 50k. We'll need to find a way to borrow soothing like $800k, at least temporarily, then have a mortgage of about $150k.

To the PP who suggested the contingency, you missed the point. To buy in our target neighborhood, routinely all contingencies are waived.

I think PP was suggesting you sell your home with a contingency (that you find a new home).

It doesn't really matter where the thread is, as long as you know where it is to check it. To me it seems to have more to do with buying/selling a home, than just general money matters, so seems appropriate in Real Estate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Only just found the thread again as out was erroneously moved to real estate. It's a money question and I'm asking for it to be moved back.

I'll look into this. I thought 401k loans were limited to a small amount, like 50k. We'll need to find a way to borrow soothing like $800k, at least temporarily, then have a mortgage of about $150k.

To the PP who suggested the contingency, you missed the point. To buy in our target neighborhood, routinely all contingencies are waived.

Why do you need 800K? You only need enough for the down payment (I am assuming 20% or so), and you would get a mortgage for the rest, right? I don't see why you would not get approved for a 660-700k mortgage, considering you have that much equity in your curent home. 800K in your 401k would certainly be enough to borrow sufficient funds for your down payment.

No, before selling our current home we'd need to come up with the full purchase price. Once we've sold our current home we'd plan to have a mortgage in the $100-200k range. We can't afford monthly payments on a 660-700k mortgage and signing up for a 30 year mortgage for that amount (even if we can qualify for it, which I assume we can't due to our salaries not supporting the repayments) for a few months while we sell our home does not make any sense.

You do know that you don't pay your mortgage for the first month after closing, right? That is usually rolled into the closing costs. So you're saying that you can't find 6 or 7K (however much the monthly payment would be on your 700K mortgage?) If you are fairly confident that your home will sell, you may only need to make one or at most two mortgage payment at that rate before paying off the rest from the proceeds of selling your current home. Your current mortgage payment sounds like it's minimal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Only just found the thread again as out was erroneously moved to real estate. It's a money question and I'm asking for it to be moved back.

I'll look into this. I thought 401k loans were limited to a small amount, like 50k. We'll need to find a way to borrow soothing like $800k, at least temporarily, then have a mortgage of about $150k.

To the PP who suggested the contingency, you missed the point. To buy in our target neighborhood, routinely all contingencies are waived.

Why do you need 800K? You only need enough for the down payment (I am assuming 20% or so), and you would get a mortgage for the rest, right? I don't see why you would not get approved for a 660-700k mortgage, considering you have that much equity in your curent home. 800K in your 401k would certainly be enough to borrow sufficient funds for your down payment.

No, before selling our current home we'd need to come up with the full purchase price. Once we've sold our current home we'd plan to have a mortgage in the $100-200k range. We can't afford monthly payments on a 660-700k mortgage and signing up for a 30 year mortgage for that amount (even if we can qualify for it, which I assume we can't due to our salaries not supporting the repayments) for a few months while we sell our home does not make any sense.

You do know that you don't pay your mortgage for the first month after closing, right? That is usually rolled into the closing costs. So you're saying that you can't find 6 or 7K (however much the monthly payment would be on your 700K mortgage?) If you are fairly confident that your home will sell, you may only need to make one or at most two mortgage payment at that rate before paying off the rest from the proceeds of selling your current home. Your current mortgage payment sounds like it's minimal.

Three are significant costs associated with taking out a large 30 year mortgage and paying it off in a matter of weeks. Plus with an HHI of $150k we won't qualify to borrow $800k.

[Anonymous]

Anonymous wrote:Sell your house first. If it's in a desirable area, you can insist on a rent back period. That, and a 45 day closing period, will give you more than enough time to find a new house. Worst case scenario, you live in temporary housing for a short time.

I am unclear why this obvious solution eludes you.

The reason this "obvious" solution eludes me is because we have been looking for months and have not yet found the right house. We will only move for the right house and gambling that it will come along during a short rent back period is very risky.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sell your house first. If it's in a desirable area, you can insist on a rent back period. That, and a 45 day closing period, will give you more than enough time to find a new house. Worst case scenario, you live in temporary housing for a short time.

I am unclear why this obvious solution eludes you.

The reason this "obvious" solution eludes me is because we have been looking for months and have not yet found the right house. We will only move for the right house and gambling that it will come along during a short rent back period is very risky.

We were also looking for the right house and were only going to move if we found it since we were basically content where we were - just wanted more space. So we got our house totally ready to sell. Then, as soon as we found a place, we put in a contract with no contingencies and a 45 day close and then turned around and got ours on the market a few days later with a 30 day close. Got the cash from our sale two days before we closed on the new house. Title company held onto the money and just transferred it over.

This worked for us b/c we could also afford the new house without selling the old one (don't even ask me how...our income was only 180k and the new house was 640 and the old house still had 300k left on the mortgage). IF our sale had fallen through, we would have been able to swing the new purchase still but would have had to do less down and have PMI. If this had happened, we would have just done a one time payment when the house did sell and have the lender recast the loan. I made sure that was an option.

You really just need to talk to a lender and find out how much they'd qualify you for if you did NOT sell your current home. If they say they'll qualify you for the amount you're looking for, then do what we did - get a contract, put old house on the market within a wek, and have a backup plan to get you through a 1-2 month overlap if ofr some reason your house doesn't sell as fast as you thought it would.

[Anonymous]

Had this conversation with an agent yesterday. If you live in a desirable neighborhood, find a house first, then put your house on the market. If it sells within 2 weeks, you will be fine. She said many times they do both transactions at the same table. She said not to buy with a contingency. People won't accept it.

No one puts 20% down anymore. I wouldn't dream of tying my money up like that. You could also sell and lease back.