Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
We have put a contract down on a $325k home and are supposed to close on May 5th. The home we are currently in is paid off and we are going to sell it once we get moved into the new home. We do not have any debt and have an excellent credit rating. We are wanting to get a 100k loan to apply towards the new loan in order to avoid PMI and get our payments down as low as possible. Our mortgage lender is Suntrust and we were told they wouldn't be able to give us a loan under that situation. They said a lot of the larger banks would probably say the same thing. I tried calling a credit union and they mentioned an equity line of credit but with that they have to come out and do an appraisal on the home and could take up to 4-6 weeks to do it. I don't understand why a person in this situation wouldn't be able to get some type of unsecured personal loan where there are no penalties for paying it off early etc. Has anyone else been in this situation before and were you able to get a loan? We do not want to back out of the contract so hoping to get this resolved soon and just need advice. Thanks so much!
We have put a contract down on a $325k home and are supposed to close on May 5th. The home we are currently in is paid off and we are going to sell it once we get moved into the new home. We do not have any debt and have an excellent credit rating. We are wanting to get a 100k loan to apply towards the new loan in order to avoid PMI and get our payments down as low as possible. Our mortgage lender is Suntrust and we were told they wouldn't be able to give us a loan under that situation. They said a lot of the larger banks would probably say the same thing. I tried calling a credit union and they mentioned an equity line of credit but with that they have to come out and do an appraisal on the home and could take up to 4-6 weeks to do it. I don't understand why a person in this situation wouldn't be able to get some type of unsecured personal loan where there are no penalties for paying it off early etc. Has anyone else been in this situation before and were you able to get a loan? We do not want to back out of the contract so hoping to get this resolved soon and just need advice. Thanks so much!
$100k unsecured loan? The bank does not want to take the risk that you might default and force them to file a lawsuit to get their money back. Even then, they might not be able to collect. For all they know, you could get the loan, then sell the old house and run with the cash off to Vegas. How can you prove to them you will not do it?
I don't know if you can get a HELOC on the old house in time to make it work, but you may as well ask. More plausible than an unsecured loan of such huge size...
Or you could simply get a conventional loan with PMI and then sell the old house and pay the loan down so you can then drop the PMI. Just make sure there is no prepayment penalty.
Was thinking taking a heloc as well, then pay it off once home is sold
could you use a credit card if your limits are that high? Interest rates would make it not worthwhile though
only other thing I could think of is to take out a margin loan, if you have $300k or more, taking $100k wouldn't be too much risk of a margin call right away. If you go this route, pay attention to market, investment can only fall about 15% if you take out the $100k in cash before the margin call.
1) When we impulsively wanted to buy another home with barely any down payment but a lot of equity in the current home we were told to get a HELOC and pay it off as soon as the old home sold (sale price would have covered the entire cost of the home).
2) Our CPA suggested if we want to buy a rental property we could go ahead and do so even with very little down payment since we also own our condo in full. She said to get both a HELOC and a mortgage. Can't say anymore about it because we're just not interested in taking on that kind of debt load right now.
They DON'T like to loan money out for a down payment. Remember the mortgage crisis? that was because they WERE lending out money on one loan for a down payment while loaning out the 80% balance too.
Here's what you do: PAY the PMI if you can't cough up the cash. When you get your hosue sold, then pay down the rest to the point where you are below needing PMI. Now they MAY require a 2 year payment history.
That's what we did, we put only 10% down, keeping a large cushion for improvements, and then decided to pay down the mortgage instead {mistake we we are ending up financing the improvements we thought we WOUDLN'T make now lol}. When we reached below where PMI required {23% equity heading for 25%} , even though we did't have the 2 years good payment history, they dropped the PMI requirement.
Best of luck, but next time I'd put in offer contingent on selling my home and doing it all at once....
my opinion.
Not knowing OP's financial situation - 100k loan may change debt to income significantly. Go through the scheduled closing, pay down with proceeds from the sale.
Why do people always consider their houses cash? An appraisal is nothing but a piece of paper and all sorts of things can happen until you have the check in your hand which often times is not what the appraisal states.
Location: Chapel Hill, NC, formerly NoVA and Phila
9,779 posts, read 15,795,280 times
Reputation: 10888
We did something very similar and did the HELOC. The timing was crucial, though, and I remember sweating it out until the very end because I didn't think the HELOC would finish in time. You need to find a bank that promises to do it quickly. Also, if you are worried about debt to income ratio, then do an interest-only HELOC since that makes your monthly mortgage payments super low so your debt to income ratio falls within their guidelines.
ETA: I remember as a backup plan I considered taking money from my ROTH IRA. You have 60 days to reinvest it back into ROTH without any penalties. I don't know if that would be an option for you. But here's an article about that: http://www.chicagotribune.com/busine...t07-story.html
Thank you all for your input on my situation. We went to our bank last Saturday and were told that we could do a HELOAN. She asked if our home had a for sale sign in the yard and I said no we are not selling until after we move in the new home. I asked if their were any penalties to us selling our home and she said no. We were also told there are no closing costs and the interest rate is less than 4%. It does take up to 35 days to close but we were able to move our closing date back which worked out.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
