Procedure for seamlessly selling old house & buying new one

[City Love]

Originally Posted by tstone

Thanks for all the info. Just planning for the future, not sure how far out that might be at this point.



No kidding-- looks like the timing would have to be perfect to avoid some extra fees. And also to get the #1 house you're eyeing, hoping someone else won't snatch it up.

A leaseback is a very good idea. Some owners don't like it because maybe they are hoping to use the money for another house. But make sure to mention it at the beginning and use it as a point for negotiation, it will make your life easier.

From a selling standpoint. Don't get too excited once you receive an offer. Too many buyer's get denied late in the game. Doesn't happen all the time, but it's happening more than it use to before.

I'd do this, put your home on the market and start looking for a home at the same time. Once you receive an offer ask for at least 1% earnest money and have your Realtor be on top of their lender and ask for frequent updates. Also ask them for a 21-30 day leaseback. This should give you enough time to get a loan even if you don't find the right home until the day you close on your old home. Now seriously narrow down the options and put an offer on your new home. If possible, make it contingent on the sale of your other home(depending on your situation.) Realize, that this makes your offer less attractive, but if you let them know you are putting $200k down, then your offer could still be very appealing..

You need to minimize your risk if your home does not sell as planned, and also need to have a contingency plan in place. Do you take a large mortgage or back out of your current deal?

There are many ways to structure your deal. Just plan ahead and have your agent explain the different ways to put a deal together.

Good luck!

[Hawk11ns]

Originally Posted by tstone

I have a sort of theoretical question, not sure if this procedure is unique to Houston (or Texas) but here it goes anyway.

Current house is getting a bit small, need/want/able to buy a bigger one. Here are the numbers and I'm going to keep it simple: Current house is paid off, say it sells for 200k and I want to buy something for 300k down the road. So that makes for a 100k mortgage to "upgrade." That's a nice thing because it's <800/mo for 15 yrs. (800+ credit score)

So how do you time everything properly so that you get that 100k mortgage? I'm thinking you'd have to sell the old house first, which gets you the money to put it down for the new house. But in that transition period wouldn't you have to put your stuff in temp storage and live out of a weekly or monthly type of place?

Or if you bought the new house before selling, wouldn't you have to pay a full mortgage until your house sells, and then refinance, wasting $3k for another closing.

I know people do this kind of thing all the time. What is the typical procedure? What other pitfalls, gotchyas or surprises (i.e. MONEY-WASTERS) can one expect doing this?

The best thing you can do is move out of the house and into an apartment. Sign a 1 year lease. Clean up the home, stage and list it for sale. Hopefully it will sale quickly. Then, wait until 2-3 months before your apartment lease is up and start looking at houses. You should be able to get closed on the house with lease-back provisions from the seller so that you are technically not financially responsible for the loan until a certain date which, if done properly, will be your move out date at the apartment. Then all you have to do is move into your new house.

[caliking]

From my recent experience with refinancing, you may not have to pay a lot in closing costs to refinace the new home. My refinancing was no cost, nothing rolled into the new loan, no prepayment penalties etc. Loan companies are hungry for business. With your credit score, you should be able to get a no cost refinanced loan.

[mtgmike]

Nothing is free. In a one in a thousand case, you may be able to modify your existing loan without closing costs with your current lender. But any other lender will only do this if they can charge you a high enough rate to pay for the costs indirectly. Its a shell game to find out what you are sensitive to, sales-wise. IMO, you are probably better off paying true fees, and getting the best market rate.

[wheretogo]

Originally Posted by tstone

Or if you bought the new house before selling, wouldn't you have to pay a full mortgage until your house sells, and then refinance, wasting $3k for another closing.

How about taking a absolutely $0 cost mortgage on the new house (obviously on a higher interest rate, may be .375 high rate than normal) and then refinance later with the proceeds from the sale paying normal closing cost ?