Need to downsize but can't get mortgage.....should I look into a hard money loan?

[Anonymous]

avalonrose wrote:

Anonymous wrote:This is silly OP stay.

There is zero reason for you to move to a $850,000 house from a $1.1 house.

You need to move to a $650,000 or less home for this to make any sense.

By the time you factor in move costs this is just wrong.

Where do you get your figures? Realtor fees will cost us about $60k and moving will be approximately $4k. Am i missing something? We still will have at least 150k in profit.

You want to sell your house in order to free up cash. It's not really about lower housing costs as the difference in maintenance and operating costs between a $1M and a $800k property is near nonexistent. Even your property taxes won't change that much. It's really tapping into the equity. But you'd probably spend close to $100k to sell and buy and move etc, just to have access to an extra 100k in cash after paying for the new house. That is where it doesn't make sense and if you really needed cash to pay off debts, then you'd be moving to a 500k townhouse, not slightly downsizing.

The very high costs of selling/buying and moving means moving is a luxury or a disaster. Tell your husband to find a better job and you might also do the same.

[Anonymous]

Why don't you shop around for a home equity line of credit?

[Anonymous]

A hard money lender will want a down payment and a 4% origination fee. Doesn’t sound like you have either

[Anonymous]

avalonrose wrote:

Anonymous wrote:This is silly OP stay.

There is zero reason for you to move to a $850,000 house from a $1.1 house.

You need to move to a $650,000 or less home for this to make any sense.

By the time you factor in move costs this is just wrong.

Where do you get your figures? Realtor fees will cost us about $60k and moving will be approximately $4k. Am i missing something? We still will have at least 150k in profit.

Don’t forget that capital gains tax may apply.

[Anonymous]

Anonymous wrote:How desirable is your house? Will it sell immediately and get lots of offers? Or not so much?

+1

Also, how do you get to this place? Did your parents buy the house for you?

[avalonrose]

Anonymous wrote:

avalonrose wrote:

Anonymous wrote:This is silly OP stay.

There is zero reason for you to move to a $850,000 house from a $1.1 house.

You need to move to a $650,000 or less home for this to make any sense.

By the time you factor in move costs this is just wrong.

Where do you get your figures? Realtor fees will cost us about $60k and moving will be approximately $4k. Am i missing something? We still will have at least 150k in profit.

You want to sell your house in order to free up cash. It's not really about lower housing costs as the difference in maintenance and operating costs between a $1M and a $800k property is near nonexistent. Even your property taxes won't change that much. It's really tapping into the equity. But you'd probably spend close to $100k to sell and buy and move etc, just to have access to an extra 100k in cash after paying for the new house. That is where it doesn't make sense and if you really needed cash to pay off debts, then you'd be moving to a 500k townhouse, not slightly downsizing.

The very high costs of selling/buying and moving means moving is a luxury or a disaster. Tell your husband to find a better job and you might also do the same.

Not really sure you're on target here. We'd be moving from 4000 square feet to about 2500 square feet. Taxes where we're looking would be half that of where we are now. We'd be moving from a two story to a one story (lower maintenance costs) Right now we have an HOA....we'd be moving into a non HOA. If we loved our house, I could see your point. But we don't.

[Anonymous]

Sell your house and rent for a while. Don't make yourself house poor again anytime soon, unless you are afraid both or one of you will just blow all the money.

[Anonymous]

Makes no sense. Keep the current house if its paid off.

[Anonymous]

avalonrose wrote:

Anonymous wrote:

avalonrose wrote:

Anonymous wrote:This is silly OP stay.

There is zero reason for you to move to a $850,000 house from a $1.1 house.

You need to move to a $650,000 or less home for this to make any sense.

By the time you factor in move costs this is just wrong.

Where do you get your figures? Realtor fees will cost us about $60k and moving will be approximately $4k. Am i missing something? We still will have at least 150k in profit.

You want to sell your house in order to free up cash. It's not really about lower housing costs as the difference in maintenance and operating costs between a $1M and a $800k property is near nonexistent. Even your property taxes won't change that much. It's really tapping into the equity. But you'd probably spend close to $100k to sell and buy and move etc, just to have access to an extra 100k in cash after paying for the new house. That is where it doesn't make sense and if you really needed cash to pay off debts, then you'd be moving to a 500k townhouse, not slightly downsizing.

The very high costs of selling/buying and moving means moving is a luxury or a disaster. Tell your husband to find a better job and you might also do the same.

Not really sure you're on target here. We'd be moving from 4000 square feet to about 2500 square feet. Taxes where we're looking would be half that of where we are now. We'd be moving from a two story to a one story (lower maintenance costs) Right now we have an HOA....we'd be moving into a non HOA. If we loved our house, I could see your point. But we don't.

It may be intentional or not but you're leaving out a lot of information that is confusing the people who want to give you advice. In the first place, I suspect you're not in the DMV area, right? In most parts of the DMV a $1.1M house is pretty ordinary and it's rare to have a HOA for SF housing outside the minimal fees you sometimes find in more recent subdivisions , so that impacts the advice we think we're giving you. Are you out West? Also, not sure you're right that just moving to a single story house translates into lower maintenance costs (a 2500 sqft one story versus 4k sqft two story means a bigger roof and that translates into a more expensive roof replacement if needed, to use as one example). If your taxes would drop by half simply by moving to a house 25% cheaper, then it means you're moving to a completely different town and also need to see what that translates into regarding schools. Even so, do the potential savings really add up enough to justify moving? Assume 80k to buy/sell/move and a generous 10k in annual savings from living in a smaller house, it'd take you eight years just to recoup the costs of selling and moving.

People who need to downsize due to financial necessities downsize dramatically, not marginally.

[Anonymous]

Clearly OP has lived her life impulsively and is continuing to make gut decisions regarding downsizing that will ensure she stays in her cycle of financial stress.

If you were so cash-strapped, you wouldn't have fixed your home so that it looks move-in ready now.

Maybe if you tell us what you owe, your expenses and your HHI, we'll have a better idea of what you need to do.

[avalonrose]

Anonymous wrote:

avalonrose wrote:

Anonymous wrote:

avalonrose wrote:

Anonymous wrote:This is silly OP stay.

There is zero reason for you to move to a $850,000 house from a $1.1 house.

You need to move to a $650,000 or less home for this to make any sense.

By the time you factor in move costs this is just wrong.

Where do you get your figures? Realtor fees will cost us about $60k and moving will be approximately $4k. Am i missing something? We still will have at least 150k in profit.

You want to sell your house in order to free up cash. It's not really about lower housing costs as the difference in maintenance and operating costs between a $1M and a $800k property is near nonexistent. Even your property taxes won't change that much. It's really tapping into the equity. But you'd probably spend close to $100k to sell and buy and move etc, just to have access to an extra 100k in cash after paying for the new house. That is where it doesn't make sense and if you really needed cash to pay off debts, then you'd be moving to a 500k townhouse, not slightly downsizing.

The very high costs of selling/buying and moving means moving is a luxury or a disaster. Tell your husband to find a better job and you might also do the same.

Not really sure you're on target here. We'd be moving from 4000 square feet to about 2500 square feet. Taxes where we're looking would be half that of where we are now. We'd be moving from a two story to a one story (lower maintenance costs) Right now we have an HOA....we'd be moving into a non HOA. If we loved our house, I could see your point. But we don't.

It may be intentional or not but you're leaving out a lot of information that is confusing the people who want to give you advice. In the first place, I suspect you're not in the DMV area, right? In most parts of the DMV a $1.1M house is pretty ordinary and it's rare to have a HOA for SF housing outside the minimal fees you sometimes find in more recent subdivisions , so that impacts the advice we think we're giving you. Are you out West? Also, not sure you're right that just moving to a single story house translates into lower maintenance costs (a 2500 sqft one story versus 4k sqft two story means a bigger roof and that translates into a more expensive roof replacement if needed, to use as one example). If your taxes would drop by half simply by moving to a house 25% cheaper, then it means you're moving to a completely different town and also need to see what that translates into regarding schools. Even so, do the potential savings really add up enough to justify moving? Assume 80k to buy/sell/move and a generous 10k in annual savings from living in a smaller house, it'd take you eight years just to recoup the costs of selling and moving.

People who need to downsize due to financial necessities downsize dramatically, not marginally.


The thing is, all of this would just be me giving you superfluous information.
My question was specifically asking about hard money loans, because with the financial situation we're in right now, we would not qualify for a loan that would allow us to purchase a house before selling ours.
Yes, we are looking forward to pocketing a few 100K, but I'm not asking these questions because we are so strapped that we cannot pay our bills.
If we really wanted to stay in the house, we could. It would be difficult but we could do it.
Thing is, we don't WANT to.
I was seeking information about loans that were tied to equity and not income.
That's pretty much it.
This has gotten way off track.

[Anonymous]

The way to find out if you qualify for a loan is to call a few lenders and see what they can offer you, not to ask on a Real Estate Forum. You got the "advice" you deserved given the forum you asked on and the drip, drip, drip of info you provided.

[Anonymous]

I’m a hard money lender. The most I’d lend on a paid off house is 50% of appraisal. It’ll cost you 3% of the loan as a fee and 16% interest, 6 month term. Payments due monthly. They’re designed for quick flips, not for what you’re trying to do.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, here is a summary of your options that I can think of:
1) Hard money loan. It's an option but not a good one since there are origination fees and the interest rate is higher than what a bank would charge.
2) Bridge loan from a bank. This is better than a hard money loan. Less fees and lower interest rate. This is different than a mortgage which I think you were looking at.
3) Sell your house first and rent back. But since you do not know when you will find a house to buy, this is a risky strategy. Maybe do a 6 month rent back.
4) Put in offers with a "home sale contingency" which isn't great because a seller does not like to see contingencies.
5) Try to time the sale of your house and the purchase of your house on the same day. This is very difficult to do but is possible
6) Sell your place with a 60-90 day rent back and if you can't find a place to buy, do a long term AirBnb temporarily for a few months until you can find a house you like.
7) Apply for a HELOC or Home Equity Loan and then use that money to buy a house. You should be able to find a lender to get you 80% of the value of your house which it sounds like your budget is for your new house.

Hope this summary of options helps you!

No lender will approve a mortgage for a buyer where the seller has a six month rent back. You’re clueless.

OP, take a look at the above for some alternative options to hard money loans. Also, the PP is wrong, you *can* do a 6 month rent back, or however long you want, but I think what the PP is saying is that it can't be done through the real estate contract. There are other ways to get it done. Ask your realtor.

[Anonymous]

Anonymous wrote:Sell your house and then rent! 100 percent.

+1