Buying a New Home when you can’t sell your present Home

Life is ever changing.  There are many reasons to buy a new home.  Perhaps the size of your family is increasing and you need more bedrooms.  Perhaps you are getting older and require less space or desire to leave a 2-story house for the likes of a single story property.  Perhaps you need to move within the state to be closer to work or family.  Perhaps, Perhaps, Perhaps.  Whatever the reason – sometimes we simply need to move.  But what if you already own a property and need to move quickly or you are unable to sell your house for the amount you are looking for?  What are your options?

 

Not being able to sell your property quickly can occur for many reasons.  If your house needs work done to it or needs to be updated then you may not get many competitive offers.  An option here is to consult with your real estate agent to go over ideas on how to upgrade your property to get better offers.  Sometimes this can be very inexpensive and cosmetic in nature.  Other times it can cost more.  If you have equity in your property you can take some of that equity out to upgrade it in order to get a better sale’s price.  But you will want to consult with your agent first.

 

Another reason a property may not sell is that it is priced too high for the area.  Many agents will tell you what your property can sell for, but if you do not listen to their advice and choose to ask for more than what they believe it can sell for – then you may be waiting for some time for an offer.  Most times when sellers do not take the advice of their realtor it is because they feel they need to make “x” amount on their property for their down payment on their new property or other times it is because they owe more on the mortgage than what the house can sell for and they do not want to pay the difference at closing.

 

If you are concerned about your down-payment but also need to move quickly then this is something you should weigh out with your Accountant, CPA, or Financial Advisor.  I will tell you that there are many programs in Connecticut that allow for 100% financing on a new purchase: USDA (but the property must be zoned for this – check with a loan officer to see if the property qualifies) or VA (must be eligible as a Veteran).  There are also programs available to you with only putting 3.5% down (FHA loans and the down payment can be gifted to you by a family member) or the 5% Down No PMI Conventional Loan (this usually requires a credit score of 680 or better).  There are options available to Connecticut home buyers that many are not aware of.

 

If you are concerned that your house will not sell for what you need it to and you will owe the difference at closing (meaning your house is “under-water”) – but you still need to move – then you should also consult your financial counselor.  From a mortgage perspective you still have options.  One thing you should be aware of is that if you do decide to short-sale your present home – most if not all lenders will not finance your new property for a minimum of 3 years.  So a short sale may not always be a good option for you.

 

Although an option is that you can choose to rent out your house or even do a lease option to buy for your present home.  Again this should only be considered an option after you have consulted with your real estate agent and financial advisor.  As well your real estate agent, for a small fee, may be able to assist you with this (helping you find renters).  You are also going to want to consult with a mortgage professional.  Because essentially if you rent out your old house and buy a new one – you would be carrying two mortgages at the same time.  So you will want to see what rent will have to be paid per month on your old home to help average out your debt-to-income ratio so you can afford your new property.  A lot of this will depend on your credit score and your monthly income, but this can be an option for those that are not able to sell their home at this time but wish to buy a new one.  Also in some cases, lenders may require to see a track record that your renter is making payments on your house.  You should consult a loan officer to see what their requirements are.

 

If I can help in any way or assist you with understanding if you can afford two mortgages at the same time please do not hesitate to contact me.  Carrying two mortgages at the same time is not ideal, it is only an option available to you if you qualify, but lets talk and see what creative solutions we can come up with together.

 

Thanks,

 

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Michael Meyer
Senior Vice President of Northeast Financial
NMLS#117875
Mike@northeast-mortgage.com
860-876-0572
210 S. Main St Middletown, CT 06457

NMLS#117273 

 

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FHA Disclosure

 

NMLS# 117273, Northeast Financial, 860-788-7237

 

The principal and interest payment on a 203,500 30 year FHA fixed rate loan at 3.25% on 96.5% loan to value is 1,025.99 with 0 points due at closing.  The APR is 4.491%.  Payments include a one time upfront mortgage insurance premium (MIP) at 1.75% of the base loan amount and monthly MIP is calculated at .85% of the base loan amount.  The .85% monthly MIP is required for a specific period of time regardless of your down payment or equity in your home.  The principal, mortgage insurance, and interest payment does not include property taxes or home owner’s insurance premiums, which will result in a higher actual monthly payment.  Rates current as of 6/26/17