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We are thinking getting a bigger house. We need the equity from selling the old house as a down payment for the new house. What would be the steps to do it? We want to stay in the same district and we don't want to rent in between. But we are not sure how to get the bank loan if we have very little cash on hand. Is there any way we can achieve it? Thanks.
We are thinking getting a bigger house. We need the equity from selling the old house as a down payment for the new house. What would be the steps to do it? We want to stay in the same district and we don't want to rent in between. But we are not sure how to get the bank loan if we have very little cash on hand. Is there any way we can achieve it? Thanks.
It's tricky, and it's very stressful. But it is do-able..all depends on whether you can find a seller who is flexible.
First step is get your house on the market. Then you need to shop for a new home, and hopefully find sellers who are willing to accept an offer that is contingent on the sale of your current home. It helps greatly to already be in contract on your current home. You have to do an awful lot in a short time. Your mortgage application on the new home will have conditions that need to be met at closing your current home (paying off any associated debts on the home, etc)...they will want a copy of the closing disclosure immediately after you close on your current home. Then they'll push for the remaining info needed and clear you to close on your new home.
We were in the same predicament, and found it much easier to do with a new construction. We paid a small down payment on a spec home the day they broke ground...they gave us until drywall to have an accepted offer on our home, otherwise they would have given us our down payment back and put the home on the market. All worked out for us and was relatively stress free....I don't know how it would have gone having to make an offer to someone who's ready to go when there are plenty of other buyers out there who are renting or have no obstacles...
Another option is to sale your house and then have the buyers rent it back to you for a month till you close on your home. That’s what I did and it all worked out. Also kept come extra $ in escrow incase any damages were done while I rented it.
I did it last year. The stars have to align but it can be done.
Our buyer had nothing to sell. Our purchase was vacant. We sold the old house in am, bought new house 2 hours after. We had a contingency in the contract for our sale that we had 7 days to vacate the old house at a price of whatever per day, I can't recall.
In today's market you will have a very hard time getting a seller to accept an offer that is contingent upon the sale of your current home. I would suggest that you get it on the market as soon as possible. Once you are in contract on the sale you will be in a much better position as a buyer. However, you will be under pressure to find a new home.
What about an equity loan (line of credit)? Don’t use the money until you have found your new house. Then use the ELOC as your down payment. The difficult part is selling your present house.
What about an equity loan (line of credit)? Don’t use the money until you have found your new house. Then use the ELOC as your down payment. The difficult part is selling your present house.
If you go this route, get the line of credit before you put the house on the market. Many banks will not lend on a house that is currently for sale.
If you go this route, get the line of credit before you put the house on the market. Many banks will not lend on a house that is currently for sale.
True, banks won't lend on a house that is currently for sale.
But be careful if you decide to get a line of credit while you're looking to buy. The line is considered debt and your debt to income ratio might disqualify you from getting an adequate pre-approval--without which no seller will take your offer seriously in this market.
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