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Hello! I own my home, no mortgage. I am interested in purchasing a larger home in the near future. I have recently seen a foreclosure (rare to see in my neighborhood) that I am considering putting in an offer for. Due to the condition of the home, bank is only accepting cash offers or reno loans. I have not listed my own home, as of yet, but am fairly confident it will sell quickly, as is the case for most homes here (multiple offers, bidding wars, no contingencies, etc). But, not sure how I would finance the foreclosed home before selling my current home. I know a bit about bridge loans, but would that be a good option? I would like to renovate the foreclosed home, while living in current home for a couple of months. I would not put my own home on the market, until I closed on new home. I anticipate my current home would sell for 150-200k more than the offer price I would be offering on foreclosed home, but I would need funding for massive renovations. Basically, how do I get a short term loan (under 6 mos) to finance new home and what costs are involved in doing so? Thanks!
not sure how I would finance the foreclosed home before selling my current home.
If the new property is not MOVE IN ready then don't sell what you have to buy it.
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I know a bit about bridge loans, but would that be a good option?
Close to.
Well, unless you have a spare $200K or so laying around... do you?
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I would like to renovate the foreclosed home...
how do I get a short term loan (under 6 mos) to finance new home
By being credit worthy.
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...and what costs are involved in doing so?
They'll vary.The higher the loan RATE the fewer hoops to go through.
The fly in the ointment is just how much TIME and just how much MONEY will be needed
to complete the project to inspections and codes and CO etc... and how far into the project you'll
need to be before you can really answer any of these questions.
MrRational- thanks for the info, but what do you mean when you say "if the new property is not MOVE IN ready then don't sell what you have to buy it"? Also, "unless you have a spare 200K or so laying around"? I live in the NYC area and finding a home can take A LONG TIME. Decent homes under a million do not come on the market often and almost always need work. Homes for 700-800k, often need huge renovations. My current home was not move in ready when I purchased, either. I have excellent credit and no outstanding loans. . I have savings, but not enough to cover the cost of the new home without selling my current home. Selling my current home first is not an option, as I may not find another home for quite some time (foreclosed home will be long gone). I am sure this foreclosed home has multiple offers as of now, so probably not even going to happen, but am considering putting in the offer anyway. Being a seller where I live is amazing, as most homes will get offers within a day, but buying......it ain't easy.
you need to talk to a mortgage lender. is this some "all of a sudden today" deal, or you're behind on getting your ducks in a row?
For ANYONE - if you own a home and are thinking of moving, unless you have the cash to buy the next home right now, then you need to speak with a highly-qualified lender (Rocket Mortgage/Quicken etc does not count) to figure out a plan.
Thanks for the responses! Yes, going to meet with a banker, but wanted to go in a bit informed. BoBromhal, yes, it is an "all of a sudden today" deal, as I was considering a move to a bigger home, but had not lined everything up. Then, this house popped up, which is a rarity where I live. Houses in this particular price range pop up only a few times a year and the fact that it is a foreclosure is even rarer. If it was not a foreclosure, would be gone in a nanosecond, but people tend to steer away from foreclosures. Not to say, there aren't other offers. But, it is cash only deal... And I do not agree, MrRational, that one should not purchase a home unless they have that cash in the bank.
And I do not agree, MrRational, that one should not purchase a home unless they have that cash in the bank.
I didn't say that. That's why they have mortgages.
If you don't have the CASH ON HAND needed to buy it outright (let alone the bundle needed to fix it all)
then you'll have no choice but to borrow it from someone. There are lenders who specialize in this sort of
(fix and flip) situation. If you can SIGN for the cash on your own credit worthiness (with liens or not) maybe...
But when you're talking about a property that those already in possession of, and especially
in a hot and probably high price market, are unwilling to fix up -even to just the habitability level--
well, you're no longer in the owner occupied RE market. You're entering the land of speculation.
Be very careful.
My position/point would be - if you've been considering moving up, then you should have very early on figured out a plan with a lender, unless you had a huge wad of cash. In theory, what you were thinking about moving up to was more expensive than this house will be, even after remodel/repairs.
I've seen some bank foreclosure sales take a year or more after they list it for sale. How will you handle that circumstance after you sell your house?
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