Procedure for seamlessly selling old house & buying new one (Houston: sale, leasing)

[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?

[EasilyAmused]

A "Bridge" Type Loan is one way to purchase the new before the old sells.

Leasing back the old house until the new house closes, is the easiest/cheapest/least stressful. In fact, you create a lease back contract.it's about 75-100+/- a day. It's far easier to have your house on the market, then go search for the new. Most likely you know the area you want to move to, and you know the months that houses flood the market (March-June).That's about the best you can "plan," it, everything else is luck of timing.

[ethanw]

I went through the same exact journey 2 years ago. Moved from 300k paid off house to much higher price for the new house, but my loan difference was almost as yours 90K against the new house.
I can describe my experience and learnings privately or in this forum if this is value for everyone else. Take your pick.

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?

[d2mini]

Just hope and pray that it all works out.

We just did this.
Had a mortgage on the current home and wanted to build new.
We got pre-approved for an entire second mortgage just incase there was overlap, and savings was in place to temporarily cover two mortgages.
Signed contract with the new house and put the old on the market.
Luckily we found a buyer who was in a short term lease that ends after we close on the new house (new build).
So we are now leasing back our own house after closing on it, until we get into the new one.
Rent is a lot, but the convenience of not moving twice is awesome.

So ya, lots of luck and some preparation for the worst case.

[fnh]

In certain states you can borrow against the equity in your current home specifically for the down payment on a new home. It is a separate loan payable upon the sale of your current home, and in conjunction with a mortgage allows you to bypass PMI and any of the logistical problems such as those you describe. I'm not sure why they are illegal in Texas. Could you do something similar with a home equity loan or line of credit advance?

Other options would be to simply buy the new home you find when you find it with the bigger mortgage if you qualify and simply pay down the loan with the sale proceeds of your current home when it sells. Why refinance? True, it will leave you with a larger monthly payment but if you can live with it you will pay off that mortgage in a much shorter time.

You could also sell your current home with a lease-back option to give you time to find a new home.

[fnh]

Ah, I see others posted while I was typing...

Our realtor told us that bridge loans were illegal in TX, is that not true?

[Mustang1]

Have your closings on the same day. The offer on the property you buy would have to be contingent on this though.

[mtgmike]

Pure luck.

That about sums it up. I got lucky and got a solid contract on my existing home, and was self employed at the time, so I hit the streets with my realtor like a maniac and found a house within a week. Still ended up with my stuff in two moving trucks for two weeks. It was cheaper to park two Budget trucks in my familiy business parking lot than any other option.

[cheryjohns]

To the OP - put your house on the market and start scouting areas/subdivisions. Once you get a contract on your house, get serious on a concentrated house hunt. You can close on your old house in the morning and have the proceeds wired to the second closing title company (if it is different). Do a 2-3 day lease-back (it's difficult to get much beyond a couple of days, unless you get that one-in-a-million buyer) - then go close on house #2. The loan you get will be based on your down payment being the proceeds from the sale.

Happens all the time.

Originally Posted by fnh

Ah, I see others posted while I was typing...

Our realtor told us that bridge loans were illegal in TX, is that not true?

You are correct.

[tstone]

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

Originally Posted by d2mini

Just hope and pray that it all works out.

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.