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Old 04-02-2015, 12:16 PM
 
149 posts, read 166,529 times
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My wife and I own our home in VT and will put it on the market sometime this month. We've already decided to move a small city in SC. I'll be retiring this summer; she will work from home, ie she can work from anywhere and just needs to be close to an airport.

We have, IMO, a sellable home in a desirable location, however the market in our area is not strong. The house could sell in a month or a year. On previous trips to our new destination, we've looked at homes with a realtor and have found the area we like. She emails us new listings weekly. There's a lot to look at.

We have no debt, not even a mortgage, and sufficient cash that we could just buy another home in our new destination. I wonder though if it would be better to apply for and get pre-approval for a mortgage in the range ($220-250K) of home we're looking at, and once approved, go about buying a home and just wait for our house in VT to sell. We'd then use those proceeds to pay off the mortgage.

If I sound like a neophyte it's because we've been in our VT house for a number of years and I have very little experience with either the dynamics of moving or in obtaining a mortgage. Any advise would be greatly appreciated. Thanks.
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Old 04-03-2015, 05:39 AM
 
736 posts, read 562,186 times
Reputation: 696
If you are considering a mortgage, now is the best time to get one since rates are at all-time lows. Low interest debt on an asset that you can deduct the interest on and get appreciation is excellent. This is all provided her and your income will e stable for the number of years you will get the new mortgage for.

But if you have no debt and no credit payments in the last 24 months on credit ards or a car loan? This could be a red flag for an underwriter and may disqualify you . The process is very demanding nowadays even for borrowers with $1,000,000 liquid and $4M in equity.It is better to just buy a home on a hot market nowdays to put yourself ahead of competing buyers and they just do a refinance cashout, if necessary. Of course,there will be differing opinions.
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Old 04-03-2015, 06:05 AM
 
Location: Southern California
4,350 posts, read 4,929,984 times
Reputation: 2129
Apply and get prequalified.
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Old 04-03-2015, 06:36 AM
 
Location: NC
6,081 posts, read 7,023,877 times
Reputation: 12054
I may find myself in the same position soon and look forward to replies from 'experts' on this. I have read that a mortgage company does not want to fund anyone they think will not hold the mortgage at least a couple of years. Is this true? I'm guessing that is so they can make whatever they consider enough money on the loan.

If you are moving to a 'hot' area I would guess you should offer cash but then work at getting a mortgage, if you want one. If you are moving to a more languid market where you can put in a mortgage contengency, that might be act as a buffer against something going wrong in the process of buying the home.
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Old 04-03-2015, 06:51 AM
 
149 posts, read 166,529 times
Reputation: 415
Thanks for the responses. When I wrote that we have no debt, I meant to say that we have no mortgage or auto loans and that we pay our credit card balances every month.

I would say that the market we're going to is active, but not necessarily "hot". I suppose there's nothing to lose by going through the process of getting pre-approved for a mortgage and, if that proves too arduous, then just paying for a new house in cash.
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Old 04-06-2015, 05:34 AM
 
736 posts, read 562,186 times
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Quote:
Originally Posted by sovertennis View Post
I would say that the market we're going to is active, but not necessarily "hot". I suppose there's nothing to lose by going through the process of getting pre-approved for a mortgage and, if that proves too arduous, then just paying for a new house in cash.
Oh, it's a lot different than 10 years ago. Be prepared for the worst and k wo they will act you need to convince them you are a good borrower. Underwriters look for issues. Just look at it from their perspective. They don't to to lose their job over something they missed even if the borrower is outstanding on paper with high credit sores and income.
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Old 04-06-2015, 07:08 AM
 
Location: MID ATLANTIC
7,598 posts, read 17,614,249 times
Reputation: 8078
You will be fine. It's probably been a long time since you have obtained a mortgage, and now that you are looking at this process, you are hearing all the horror stories. I'm willing to bet (by the clues you have left), scores likely in the high 700's/low 800's, strong reserves, with no ratio issues. If I am correct, your profile will afford you the lowest rates a lender has to offer.

Your only problem is figuring out where to start. It really is not that stressful if you are organized or can access the bulk of your documents electronically. I also recommend you look at ARMs for your new loan. Your situation is truly the ideal scenario. After all, why pay 3.625% when you could pay 2.5% or 2.75% for a long term ARM? Surely, you will be selling the VT home in 5 to 7 years? (Had you not made the "we'll just pay cash" remark, my opinion on an ARM would not be as strong).

Get pre qualified and go shop in confidence. The loan should be the least stress of the process, but somehow, it's become a bit of a tangled mess. You should not have any issues.
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Old 04-07-2015, 08:25 AM
 
12,404 posts, read 9,195,957 times
Reputation: 8861
Quote:
Originally Posted by sovertennis View Post
My wife and I own our home in VT and will put it on the market sometime this month. We've already decided to move a small city in SC. I'll be retiring this summer; she will work from home, ie she can work from anywhere and just needs to be close to an airport.

We have, IMO, a sellable home in a desirable location, however the market in our area is not strong. The house could sell in a month or a year. On previous trips to our new destination, we've looked at homes with a realtor and have found the area we like. She emails us new listings weekly. There's a lot to look at.

We have no debt, not even a mortgage, and sufficient cash that we could just buy another home in our new destination. I wonder though if it would be better to apply for and get pre-approval for a mortgage in the range ($220-250K) of home we're looking at, and once approved, go about buying a home and just wait for our house in VT to sell. We'd then use those proceeds to pay off the mortgage.

If I sound like a neophyte it's because we've been in our VT house for a number of years and I have very little experience with either the dynamics of moving or in obtaining a mortgage. Any advise would be greatly appreciated. Thanks.
What's the point? Getting a loan for a few months that you don't need seems a waste of money, unless your savings are illiquid or would give you a large capital gains tax bill, or you'd deplete everything you have with no emergency fund left. Using retirement accounts as an emergency fund for a few months is not necessarily a bad idea once you're past age 59 1/2.

If your only savings are in a 401(k) or traditional IRA, then go ahead and get the mortgage, to keep you from being pushed to a high tax bracket.
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