Consequences of buying a house to sell (mortgage, mortgage, monthly fee)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Just in short, I`m planning to buy a house to sell it right away (or whatever time it will take to sell it). I never had a mortgage before so I do not know 100% how that works. Lets say I get approved for $X00,000 mortgage, buy a house a week later and sell it before my first payment is due. Am I going to be charged any interest??? Can this experience hurt me in the future?
Well I am not a professional in the Real Estate Biz BUT WHY on earth would you want to do that?? Do you have any idea how many houses are currently sitting on the market now? For weeks and months?? !!!!!
First of all , I'd be surprised you could get approved for a loan and buy a house a week later...it will more than likely take longer than that to get to closing, weeks often. And then to hope to sell it before the first payment comes due?????
If it is a primary residence, and you were lucky enough to sell quickly, and make profit, you will have capital gains, (unless you meet certain criteria,like job trnasfer out of area).
If it is a flip , you better crunch those numbers but good!
No offense, but I think you need to go talk to a mortgage lender and a realtor, and a tax person. to have a better understanding of buying and selling.
You will have to pay interest from day you close as a buyer until the day you close as a seller. Typically takes 30 days to close from date of sale.
You have to pay property taxes, HOA dues (if any), and other assorted monthly fees during this time period.
And you will have to pay closing costs as a buyer, which can be costly depending on which lender you go with. You'll also pay transaction costs as a seller.
You will have to pay interest from day you close as a buyer until the day you close as a seller. Typically takes 30 days to close from date of sale.
You have to pay property taxes, HOA dues (if any), and other assorted monthly fees during this time period.
And you will have to pay closing costs as a buyer, which can be costly depending on which lender you go with. You'll also pay transaction costs as a seller.
Ok, so you mean that interest will be charged from the day 1 of mortgage right??? Are there any penalties for paying off early? Would it be any penalties for any addiional loans in the future?
Just in short, I`m planning to buy a house to sell it right away (or whatever time it will take to sell it). I never had a mortgage before so I do not know 100% how that works. Lets say I get approved for $X00,000 mortgage, buy a house a week later and sell it before my first payment is due. Am I going to be charged any interest??? Can this experience hurt me in the future?
Any opinions and advices welcome.
I don't know where you live, but assuming the housing market is like 90% of the country:
1) If you buy a house today, chances are it will probably be worth less 1 month from now, and even less 6 months from now. Most people that are purchasing now are either buying homes at firesale prices or else planning on living in the home for a number of years, when at that point the home will most likely will have increased in value.
2) You've heard the one about buying a car and driving it around the block and selling it. Same thing with a house right now. You'll have significant closing costs when you purchase . . . and significant closing costs when you sell.
3) What makes you think you'll be able to sell the house in the next 6 months, let alone in the month after you purchase it? The only way to do that is to price it significantly LOWER than what you paid for it.
Ok, so you mean that interest will be charged from the day 1 of mortgage right??? Are there any penalties for paying off early? Would it be any penalties for any addiional loans in the future?
Some loans have early payoff penalities and some don't. You would want one that doesn't charge early payoff penalties.
No penalities for loans in the future.
Most home loans require that you agree that you will live in the home as your primary residence. If you turn around and sell 1 week later, that could be considered fraud unless you actually used the home as your primary residence for 1 week.
You also need to consider that a lot of banks won't loan on the house if they see it as a flip. That note will probably need to be seasoned for at least 4 months. More likely a year in this market.
If you've never bought a house before, don't start with a flip. No offense, but if you didn't know the answer to this question on your own, you have no idea what you're doing and will be screwed in this transaction.
If you intend to flip a property you need to run a net sheet. You need to figure all of your costs associated with buying the house, remodel costs, costs to hold the mortgage, and then costs to sell.
Interest is paid forward, so yes you will prepay your interest at closing for your first payment.
Your plan sounds like a financial fiasco waiting to happen.
You also need to consider that a lot of banks won't loan on the house if they see it as a flip. That note will probably need to be seasoned for at least 4 months. More likely a year in this market.
If you've never bought a house before, don't start with a flip. No offense, but if you didn't know the answer to this question on your own, you have no idea what you're doing and will be screwed in this transaction.
Ok, so mortgage suppose to be for a primary residence, right? Well, I know that I`m not the first one trying to buy a house to sell and definetly not the last one. How do I explain at the bank that I`m willing to do business and pay for my couple month mortgage? There suppose to be a way. Please advice me.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
