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This must happen very often, yet I haven't been able to get a straight answer from a couple different banks I've called. I am selling my home, and will be purchasing another. It's unlikely that I can schedule both closings on the same day, right? And in order to qualify for the next house, I need to sell my current one (I can't hold both mortgages at once). Do banks give you an "in between" period (maybe a few days? a week?) between when you close on one and then the other?
If I close on the sale of my home first, I could be homeless for a few days before closing on the new place. If I close on the purchase of the new home first, then I'll technically own two homes for a few days. But that would give me time to move. Do lenders allow for this, that as long as you are in escrow and have both closings scheduled, you are allowed to own both for a few days in between closings?
You're looking for a simultaneous close. You would close in the morning on the sale of your home, and later on the purchase.
However, other things besides lenders can infect the process to that there is a day of lag time, such as last minute items from either the purchaser of your home's loan, or your purchase, time of day, time zone, availability of wired funds being released, and the degree to which your lender requires docs to review and release the wire.
You could sell your home with a leaseback clause wherein you remain in it for X number of days after closing.
For this to work best, the same lender would handle the loan for the purchaser of your home, and for your purchase. You will want a bank, not a broker. You will want a bank that "Funds off the HUD" only, meaning they need only 4-5 docs, the signed Settlement statement, and they are not so nitpicky as to hold up the funding over some random doc.
For instance, Guild Mortgage requires ORIGINAL closing documents to fund. This sucks. My company funds off of 3-4 faxed pages from Title. Huge difference.
The tough thing for you is that ten out of ten Loan Officers will tell you "oh yeah, we can probably do that." And they have no idea. Most of them come from the refinance world, where closing can happen whenever things get done. Purchase, relocation, and Simultaneous Closings are for the seasoned veteran to pull off. I'd include in your questions a query as to the specifics of your potential lender's purchase experience.
It actually does vary by state and by closing procedures. Here in Arizona, it is very difficult to do back to back closing because our closing process requires your down payment money and all docs signed prior to funding of the loan and the deed is recorded afterward. Closing in AZ is defined as " recordation of deed". Trying to do it all in one day creates a whirlwind of activity.
Typically people here close on the home they are selling on one day, put their belonging on a truck, close on the house they are buying the next day (or 2 or 3) and move into their new home. This way you get to spend a night or two in a nice hotel where you can relax and ponder your good fortune.
Here in AL we do back to back closings all the time. We do "table funded" closings so everything is dispersed at the table and the deed filed by the attorney within a week or two after closing.
Here in Texas, we do simultaneous closings back to back all the time. There is no need to use the same lender as the buyer of your home. That's a ridiculous thing to say. You can use whatever lender you want. It happens all the time. You need to find out what is custom in your area as you didn't say what state you're in.
So what do you say in the purchase contract if your house has been sold but not closed yet? Would you say 1 Mickey mouse drive must close the same days as 2 Obama Avenue? My house was contracted yesterday and I am contracting for one today.
So what do you say in the purchase contract if your house has been sold but not closed yet? Would you say 1 Mickey mouse drive must close the same days as 2 Obama Avenue? My house was contracted yesterday and I am contracting for one today.
You could say that the closing on the house you are buying is contingent on the closing of the house you are selling. Some sellers will not accept that contingency, some will.
But if you don't sell your other house, your financing will be declined (assuming it wasn't a cash offer), and most contracts have a financing contingency that stays right until closing. So if you don't sell, you can't get approved to buy, so you can get out of that contract and get your EM back (most of the time)
Same day closings are pretty common here too. You close on the one you are selling in the morning, and on the one you are buying in the afternoon, or the next morning. You might have to have all your stuff in a truck or a pod for a day and stay in a hotel one night, or else negotiate a rent back for a day or so, but that isn't too bad.
If you can't qualify for both mortgages, you CANNOT close on the new house prior to selling the first house. You just don't have a way to do it. Lenders look at worse-case and if the buyers on your house end up not buying, then the lender is at risk because you can't afford to pay both mortgages.
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