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

[Anonymous]

We want to move and can't work out the logistics of making an offer in such a competitive market where buyers often waive all contingencies.

Here are our stats:

Current home worth about $850k in a desirable area where homes sell quickly (BUT - its is in fairly good but not top notch condition and certainly not just renovated). We have a mortgage of $140k remaining. After costs we can assume to clear about $650k.

We have a HHI of approx $150k but this is a raise from $100k last year as documented by tax returns. I assume we will not be able to qualify for a large mortgage even temporarily until the sale of our home based on income alone.

We have a HELOC of $125k, all of which is currently available to borrow.

We have approx $100k in savings. This is our primary emergency fund though.

We have nearly $300k in a brokerage account which would have tax implications if we sold stock, so we don't want to temporarily liquidate this, unless we had to.

We also have about $800k in retirement and college savings which we won't touch, but could perhaps be used to secure a loan?

So if we're to hope to be able to put in a competitive offer, how would we do this, short of selling our house first and moving to a rental.

[Anonymous]

At what price range are you hoping to buy?

[Anonymous]

About $750-900. Similar range to our current home, but we need the equity in our home to buy, or find another temporary way to finance until we sell our home.

[Anonymous]

We took out a 401k loan, and repaid it within a month. Cheapest, quickest and easiest way to borrow money if you are reasonably sure it will only be for a short term.

We bought our new home first, with a longer close date (that the sellers requested, but it worked really well for us too because we still needed to list and sell our existing home). We sold within 2 weeks of listing, and closed both transactions on the same day (so technically we didn't even really need to use the 401k money, but of course we did not know that at the time we made our offer. The peace of mind was worth the $150 or so transaction fee).

[Anonymous]

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

[Anonymous]

We are in the same situation, OP. There aren't very many options, unfortunately. You can do a 401K loan, a bridge loan (but can be pricey), or refinance the existing home if you have enough equity plus assets (401K loan or other) to then buy the second home in cash.

The simplest way to do it is to sell your house first, though, which is likely what we will do. A little nervewracking since we're in a pretty hot market so you can write a lot of offers before getting a house, but it is starting to soften.

Also talk to your bank to find out how much you qualify for, since that may make a difference in how you go about doing it.

[Anonymous]

Have you checked to see how much you could qualify for without selling your current house?

I also want you to check and see how much you could qualify for if you had no current mortgage

If you can get 80% of your new purchase price this can be doable for you at demininis cost.

[Anonymous]

Curious why you want to move?

Where Re you moving from and to?

[Anonymous]

Anonymous wrote:We want to move and can't work out the logistics of making an offer in such a competitive market where buyers often waive all contingencies.

Here are our stats:

Current home worth about $850k in a desirable area where homes sell quickly (BUT - its is in fairly good but not top notch condition and certainly not just renovated). We have a mortgage of $140k remaining. After costs we can assume to clear about $650k.

We have a HHI of approx $150k but this is a raise from $100k last year as documented by tax returns. I assume we will not be able to qualify for a large mortgage even temporarily until the sale of our home based on income alone.

We have a HELOC of $125k, all of which is currently available to borrow.

We have approx $100k in savings. This is our primary emergency fund though.

We have nearly $300k in a brokerage account which would have tax implications if we sold stock, so we don't want to temporarily liquidate this, unless we had to.

We also have about $800k in retirement and college savings which we won't touch, but could perhaps be used to secure a loan?

So if we're to hope to be able to put in a competitive offer, how would we do this, short of selling our house first and moving to a rental.

Sell your house first with a contingency to be able to find a house to buy.

[Anonymous]

2 401k loans here as well. Totally worth it, I think our fees were less than $80, let the moves go smoothly (we were only supposed to have 2 weeks between closings, but first buyer fell through and it ended up being 6 weeks), and the money was back in the accounts quickly.

I was almost startled by how easy it was to take a loan out from our 401ks. Glad I'm not tempted by that kind of stuff.

[Anonymous]

You should be able to get a bigger HELOC.

[Anonymous]

Margin loan can do 50 percent value of equities and interest tax deductable.

[Anonymous]

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

+1. They won't loan you the entire amount (they leave a margin to account for movement in the market), but it's an easy, relatively low cost way to do this, if you pay it off quickly.

This, plus possibly a loan from your 401(k), could get you there.

[Anonymous]

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.

[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.

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.