Is it possible for me to buy this house?

[Anonymous]

House is $749,900. We have $75,000-$100,000 of equity in our current house. Here's the tough part: We only have about $20,000 in liquid, non-retirement savings. Our HHI is $300,000. There's no way we can buy the house without selling our house first, right?

[Anonymous]

What do you spend your money on that you have less than one month's salary saved? 300,000/12 =25,000 per month.

[Anonymous]

Prob not. Save as much as you can for a year or sell your house and then look again.

[Anonymous]

Anonymous wrote:What do you spend your money on that you have less than one month's salary saved? 300,000/12 =25,000 per month.

Well, there's taxes, so we don't bring home anywhere close to $25,000/month. We've also each got big promotions/raises, so this has only been our HHI for the last 3 months or so. We also have spent about $25k in the last year on home maintenance.

[Anonymous]

No

[Anonymous]

Wait, so you spent 25k on home maintenance on a home you only have 75k equity in (let's go low considering costs to sell) and are considering selling it with that little non liquid savings?
Why?

[Anonymous]

Anonymous wrote:House is $749,900. We have $75,000-$100,000 of equity in our current house. Here's the tough part: We only have about $20,000 in liquid, non-retirement savings. Our HHI is $300,000. There's no way we can buy the house without selling our house first, right?

Why do you want to move?

[Anonymous]

Anonymous wrote:Wait, so you spent 25k on home maintenance on a home you only have 75k equity in (let's go low considering costs to sell) and are considering selling it with that little non liquid savings?
Why?

We had tree roots clog our outdoor sewer line which caused our basement to flood. We had to redo the flooring in our finished basement, replace the sewer line, and repair our lawn. The washer, dishwasher, garbage disposal, and refrigerator all had to be replaced in the last year. We had a dilapidated wooden deck that we tore down and replaced with a stone patio. Other than the patio (and we had to do something as the deck had become hazardous), none of that stuff was really our choice. There has been absolutely no home value appreciation in our neighborhood in the years since we bought the house. Houses are actually selling for less than they did 8-10 years ago. Every bit of equity is money that we put into the house. Sure, we could have saved more but we have had two kids in daycare (which is ending this year when they go to K). We max out our 401k contributions. We're not extravagant by any stretch. We take one domestic vacation a year and another trip to visit grandparents across country. Our biggest non-fixed expense is food, and I just don't have the time to clip coupons or do rigorous meal planning to save a lot there.

We don't need to move and weren't planning on it, but I saw a beautiful, much bigger house in another area that has been sitting for a couple of months and was wondering if there was any way to make it work. I didn't think so, but thought I'd ask. I don't understand why some of the posters in this forum insist on berating people who ask questions for the state of their finances rather than just answering the question posed.

[Anonymous]

Do you mean, could you get a bridge loan so you could buy and then sell, or could you afford the second house while keeping the first house?

[Anonymous]

You could borrow against your 401 K as long as you are sure your current house will sell.

[Anonymous]

Anonymous wrote:Do you mean, could you get a bridge loan so you could buy and then sell, or could you afford the second house while keeping the first house?

We would try to sell our house asap, and I think it would sell quickly, but if the sellers wouldn't accept a contingency, I'm not sure how it could work.

[Anonymous]

Of course it's possible. Ever heard of contingency?

[Anonymous]

No opinion on whether you should.

But, yes you can.

One way: sell your current house or make the new purchase contingent on the sale of the old one. You can get an fha loan for as little as 3.5% down, macimum loan amount $729,500. When everything settled you'd actually have more liquid sacings than you do now.

Another way: if you have 30% equity in your current house and if will rent cash flow positive, you should be able to qualify without selling your current place.

Another way: a bridge loan when you buy so as to enable you to put less down. (Try eagle bank or first savings mortgage locally)

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do you mean, could you get a bridge loan so you could buy and then sell, or could you afford the second house while keeping the first house?

We would try to sell our house asap, and I think it would sell quickly, but if the sellers wouldn't accept a contingency, I'm not sure how it could work.

Never know until you try. If you're serious about it, make an offer w a contingency. If they don't accept, you're out nothing. If the house has been sitting, though, there's no reason they shouldn't take a risk and accept. GL!

[Anonymous]

You might be able to buy the new house contingent on the sale of your house, but $75-100K really isn't that much equity, when you factor in the costs to sell. I don't know what your house is worth, but when we bought our $650,000 house in November, the agent commissions alone were $19 for the buyer AND the seller, which came out of the purchase price. So assume MINIMUM of $20-30K in expenses to sell. If you only have $75K of equity, that would leave you with roughly $50K for a down payment. That is a pretty small down payment for a $700K+ house.

Now that you have a higher income you should be able to start aggressively saving. Once your kids start day care, it should get easier, although you likely will still have after care costs and camps in the summer, which I hear add up quickly. IMO you should aim have at least a 10 percent down payment on a house that expensive, with a sizable amount left in the bank after closing.