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Currently own a condo I am going to need to sell in order to buy a conventional SFH in 2.5 to 3 years.
I bought at a good point to get relatively inexpensive real estate back during the recession and all I am counting on is getting my purchase price back on the sale. I should get some appreciation as well, it not sure how much.
We are trying to “save” by paying extra on the mortgage rather then putting the money in a savings account as the mortgage interest rate is significantly higher then what we would get with CDs or a savings account. Time period is too short for stocks imo.
Assuming I only get what I paid and I sell in 3 years, I should get roughly 90k out of this sale assuming we pay as we have set our minds to over the next 3 years (significant payments on top of what is due towards principal).
We currently have roughly 25k in a savings account in case of emergency.
Question is, when the time comes we will want to get roughly a 400-450k house. Should I save up enough money outside of the condo to get a 10% down payment, so that I am not overly rushed into selling the place? Being contingent on selling the current condo doesn’t seem ideal, especially since this is a suburban town and 1 bedrooms are probably a tough sell. Even two bedrooms in this complex have been slow to sell (but are also overpriced imo).
You would need to qualify for both mortgages. Do you have enough income to offset and keep your debt ratios low enough to qualify? You haven't given enough information for any of that. But also, lending laws/rules change all the time. Programs come and go. Rates go up and up and down... you don't know what your buying power will be until you're closer to 6 months out. Just save what you can.
Currently own a condo I am going to need to sell in order to buy a conventional SFH in 2.5 to 3 years.
I bought at a good point to get relatively inexpensive real estate back during the recession and all I am counting on is getting my purchase price back on the sale. I should get some appreciation as well, it not sure how much.
We are trying to “save” by paying extra on the mortgage rather then putting the money in a savings account as the mortgage interest rate is significantly higher then what we would get with CDs or a savings account. Time period is too short for stocks imo.
Assuming I only get what I paid and I sell in 3 years, I should get roughly 90k out of this sale assuming we pay as we have set our minds to over the next 3 years (significant payments on top of what is due towards principal).
We currently have roughly 25k in a savings account in case of emergency.
Question is, when the time comes we will want to get roughly a 400-450k house. Should I save up enough money outside of the condo to get a 10% down payment, so that I am not overly rushed into selling the place? Being contingent on selling the current condo doesn’t seem ideal, especially since this is a suburban town and 1 bedrooms are probably a tough sell. Even two bedrooms in this complex have been slow to sell (but are also overpriced imo).
Any thoughts or advice? Thanks
You can do a sale with rentback on the first house, allowing you to use the proceeds as a down payment on the next house without having to move twice. At least look into it.
You will have greater flexibilty with funds saved outside of the sale of your present home. If the sale of the present home is delayed for any reason, you can still close provided your purchase lender follows Fannie guidelines. Fannie allows the purchase lender to not count the current mortgage, provided you have a contract and your buyer has a written loan commitment. The purchase lender doesn't need the commitment, but they will need a copy of the contract showing all contingencies removed, including the financing contingency.
Obviously save as much as you can, but IMO you’re fine to have the down payment come exclusively from your sale, as long as you are OK with your purchase being contingent on your sale. If it’s a seller’s market for what you’re looking to buy, you will probably want to at least wait until you have a contract on your condo (many people in my area do 2 closings in 1 day on both their sale and purchase), or maybe even wait until you close on your condo and find temporary housing for a month or 2. Moving twice is a pain but you can put most of your stuff in a POD or something similar.
It might also be worth looking into putting down 20% which would mostly be your entire proceeds assuming the $90K is after commissions, etc. Assuming you don’t want to touch the $25k, I’d say you would probably at least want to save enough for closing costs on your purchase, plus moving expenses, likely some furniture as well as some amount for repairs that might need to be made in the near future.
Currently own a condo I am going to need to sell in order to buy a conventional SFH in 2.5 to 3 years.
I bought at a good point to get relatively inexpensive real estate back during the recession and all I am counting on is getting my purchase price back on the sale. I should get some appreciation as well, it not sure how much.
We are trying to “save” by paying extra on the mortgage rather then putting the money in a savings account as the mortgage interest rate is significantly higher then what we would get with CDs or a savings account. Time period is too short for stocks imo.
Assuming I only get what I paid and I sell in 3 years, I should get roughly 90k out of this sale assuming we pay as we have set our minds to over the next 3 years (significant payments on top of what is due towards principal).
We currently have roughly 25k in a savings account in case of emergency.
Question is, when the time comes we will want to get roughly a 400-450k house. Should I save up enough money outside of the condo to get a 10% down payment, so that I am not overly rushed into selling the place? Being contingent on selling the current condo doesn’t seem ideal, especially since this is a suburban town and 1 bedrooms are probably a tough sell. Even two bedrooms in this complex have been slow to sell (but are also overpriced imo).
Any thoughts or advice? Thanks
Mortgate interest rate is probably higher but you should check with your accountant because you might benefit from paying more mortgage interest since it can be tax deductible. My accountant advised us to pay on other stuff and/or invest rather than pay down the mortgage interest.
Unless you can qualify for two mortgages, you will have to have purchase of house contingent on sale of condo but often you can set closings same day. Sometimes unless you have a strong contract on the condo in hand, in a multi-offer situation or hot market, your offer might be overlooked in favor of non-contingent offers.
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