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I am getting ready to move to Arizona at the end of the summer.
The sale of houses here in Colorado Springs is rather hot with prices going up.
The sale of houses in Phoenix area (specifically Sun City West) seems somewhat static.
I will buy a house in Phoenix for approximately the same amount of money for which I will sell here in Colorado Springs.
I currently own with no mortgage or car loan, and technically have enough savings to buy a house in Phoenix outright (but then I would have almost no savings left).
I would like to buy in Phoenix before selling my house here.
The bank is suggesting 2 possibilities: a bridge loan (which they will do but seem not to prefer) versus a home equity line of credit.
Any thoughts as to which would be the better route to go?
I'd go for a somewhat concurrent close. You may end up buying in PHX with your savings - but it should be a very short delay to replenish your savings.
We were in almost your same position. We used a home equity line of credit. Discuss the differences with your banker. I do not believe we paid for attorney fees or other fees. Interest rates might be different We also negotiated that closing it early they wouldn't charge us fees. We could have moved the equity loan over to the new house but didn't want that out there. We bought a house then put our house on the market which hot at the time and sold it the same day. We ended up closing a little over a month apart and took out a very small amount since we expected it back in the bank soon.
Can I make a recommendation on moving? Don't move stuff that you might replace in the near future. If you furnishings are old or not expensive it might be better to sell them and purchase new in Arizona even if you do the move yourselves. Despite my suggestions to my dh we ended up moving in stages our furnishings most of which are gone now.
With a home equity line of credit you don't have to take the money if you happen to close very close together and decide not to. It is just there in case.
I'd go for a somewhat concurrent close. You may end up buying in PHX with your savings - but it should be a very short delay to replenish your savings.
I agree. Whether it's a bridge or HELOC, you are going to end up paying a fee for the use of their money and on a bridge, standard mortgage fees. Why not just float yourself the money and then pay yourself back, for free.
Or you could sell now with a 2 or 3 month lease back. You'll have the profits from the sale in order to pay cash for the new house in PHX and not have to use your savings but still have a little additional time to find and close on the new house.
We were in almost your same position. We used a home equity line of credit. Discuss the differences with your banker. I do not believe we paid for attorney fees or other fees. Interest rates might be different We also negotiated that closing it early they wouldn't charge us fees. We could have moved the equity loan over to the new house but didn't want that out there. We bought a house then put our house on the market which hot at the time and sold it the same day. We ended up closing a little over a month apart and took out a very small amount since we expected it back in the bank soon.
Can I make a recommendation on moving? Don't move stuff that you might replace in the near future. If you furnishings are old or not expensive it might be better to sell them and purchase new in Arizona even if you do the move yourselves. Despite my suggestions to my dh we ended up moving in stages our furnishings most of which are gone now.
With a home equity line of credit you don't have to take the money if you happen to close very close together and decide not to. It is just there in case.
Interesting. You gave me more to think about! Thanks!
I thought I would give you folks an update. My appointment with a loan agent is not until tomorrow, but in a phone conversation with her, she told me USBank does not do bridge loans. 5th largest banker. Interesting.
When we moved from Colorado Springs we sold our house there and moved to Surprise (AZ) after it was under contract. We left our household goods in storage there (one month was included in the cost), stayed in a VRBO (and negotiated a great rate since it was summer), and ended up closing on our new home less than a month after arriving. We did a remote closing on our COS house with no trouble. I liked the security of having our first house sold and closed before buying the new one and I knew exactly what we would be walking away with, money wise. Plus the few weeks in the VRBO was a mini-vacation after the stress of packing and moving!
When we moved from Colorado Springs we sold our house there and moved to Surprise (AZ) after it was under contract. We left our household goods in storage there (one month was included in the cost), stayed in a VRBO (and negotiated a great rate since it was summer), and ended up closing on our new home less than a month after arriving. We did a remote closing on our COS house with no trouble. I liked the security of having our first house sold and closed before buying the new one and I knew exactly what we would be walking away with, money wise. Plus the few weeks in the VRBO was a mini-vacation after the stress of packing and moving!
The other thing I was thinking of doing was to simply put my house up for sale and do a short-term rental in Sun City West (where I want to move) for perhaps 3-4 months, let my house here in COS sell, and buy as soon as it does.
I have a totally different idea. I'd be taking a mortgage on the new phx home. With interest rates still so low, I can do better keeping the cash from the sale of the CO home invested. (PS this is exactly what we did when we purchased our retirement home in 2013.)
I thought I would give you folks an update. My appointment with a loan agent is not until tomorrow, but in a phone conversation with her, she told me USBank does not do bridge loans. 5th largest banker. Interesting.
That is because it costs more money to do the loan that what they would make on the loan. I am willing to bet banks ranking 1 - 4 are the same. They have to pay a loan officer, processor, underwriter and closer and all for marginal return.
You would have better luck obtaining a signature line of credit or dividing it up against 4 or 5 credit cards (no, I am not suggesting that). I think JKGoumet had the best idea, finance in AZ and payoff upon sale.....if you need mortgage insurance, be certain you get the refundable kind. But, I will tell you most lenders would not be interested if the knew you planned to pay off within 90 days. Why? Then it would really cost them money. Penalties are paid behind the scenes for what we call EPOs or early payoffs when a loan is paid off in the 1st 6 months. So I would not be quick to lay out your plans.
Your best bet (in a perfect world) would be to take a loan out against your 401. If not an option, borrow against assets (either home), just don't advertise the early payoff. Or, get a gift, one you feel compelled to repay. You can also go private source (like Lending Club, not sure of limit), but it's not cheap.
Good luck!
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