New Mortgage questions..

[annab3550]

I've owned my house for the last 13 years and plan on selling it in the next 6 months and buying a smaller home. (Youngest DD graduates from HS this year).

From the sale of my house I'll have over 6 figures in profit.

I've found the house I plan to buy ( a private sale, not on the market but buying a house from a friend who's outgrown hers).

I plan on buying the house with over 30% down and a 15 year morgage. The last time my credit was checked it was over 800.

So here's my question. I was talking to a friend today that said I needed to have the downpayment PRIOR to getting approved for the morgage now. This (if it's true) would be new to me, as in the past the money for the downpayment showed as coming from the sale of a previous home. He's telling me that I'll have to sell my house and have the $$ before being able to go for my new morgage. Is that true?

As mentioned, I have excellent credit, a more than reasonable down payment and I do have savings and retirement. (Though I don't have the large amount of $$ in the bank to make that downpayment).

I'm sure some of you hve moved since the housing market crashed and will be able to tell me if I have to have $$ in hand before being approved for a morgage.

Thanks.

 

[goofy77]

I think as long as you can afford both of the payments at the same time then you don't have to sell your house first. I had done the same thing about 5 years ago. I just had to make 2 mtg payments.

I've owned my house for the last 13 years and plan on selling it in the next 6 months and buying a smaller home. (Youngest DD graduates from HS this year).

From the sale of my house I'll have over 6 figures in profit.

I've found the house I plan to buy ( a private sale, not on the market but buying a house from a friend who's outgrown hers).

I plan on buying the house with over 30% down and a 15 year morgage. The last time my credit was checked it was over 800.

So here's my question. I was talking to a friend today that said I needed to have the downpayment PRIOR to getting approved for the morgage now. This (if it's true) would be new to me, as in the past the money for the downpayment showed as coming from the sale of a previous home. He's telling me that I'll have to sell my house and have the $$ before being able to go for my new morgage. Is that true?

As mentioned, I have excellent credit, a more than reasonable down payment and I do have savings and retirement. (Though I don't have the large amount of $$ in the bank to make that downpayment).

I'm sure some of you hve moved since the housing market crashed and will be able to tell me if I have to have $$ in hand before being approved for a morgage.

Thanks.

 

[eliza61]

I just brought my new house with about 50% down. Now my new house was not contingent on the sale of my old house so yes I did have to prove I had those assets available.
What surprised me was How different mortgage companies had different rules. I got turned down for a mortgage because my house was not on the market yet even though it had no mortgage on it and my salary was enough to cover both expenses. Said I could quit my job and no longer afford the up keep. Which made new wonder how people brought vacation homes.

 

[annab3550]

Thanks. I may not have been clear enough on my question.

I plan on selling my house (I live in an area where houses still sell quickly) before closing on the new one. So, at closing I'll have one house and the cash to put down. BUT, I won't have the cash when I apply for the morgage (it will show the downpayment will come from the sale of my current home). I was told you can't do that anymore and have to have the cash in hand when we apply even though we will absolutely have the cash at closing. If that's the case, I'll end up homeless after I sell my home and wait for a morgage to be approved with my newly aquired cash.

 

[elgerber]

Thanks. I may not have been clear enough on my question.

I plan on selling my house (I live in an area where houses still sell quickly) before closing on the new one. So, at closing I'll have one house and the cash to put down. BUT, I won't have the cash when I apply for the morgage (it will show the downpayment will come from the sale of my current home). I was told you can't do that anymore and have to have the cash in hand when we apply even though we will absolutely have the cash at closing. If that's the case, I'll end up homeless after I sell my home and wait for a morgage to be approved with my newly aquired cash.

No that is not true. I am loan processor, and have 3 files closing tomorrow, all are selling their current homes they same day, and using the proceeds for closing.

 

[annab3550]

No that is not true. I am loan processor, and have 3 files closing tomorrow, all are selling their current homes they same day, and using the proceeds for closing.

THANK YOU! That is exactly what I needed to hear.

 

[yoopermom]

I get your question, because we're going through something similar right now. My best advice would be to make an appointment and go in and talk to the loan advisor at your bank. It's their area of expertise.

In our case we own our current house free and clear, found the house we want to buy, and wanted to put in an offer NOT contingent on the sale of our existing house (even though we will be selling it). We only had to put up $1K in earnest $$ to satisfy the real estate aspect of it.

Our loan officer did preapproval over the phone (because we were in such a rush not to lose out on this house), and asked how much we were planning on putting down, and where that $$ was currently located. In our case, we are taking out a 100K mortgage, have 30K in a savings account, and will have 30K as a "gift" from my parents (which we will be repaying when our current home sells).

If we would not have had that $$ gifted to us, we would have had to take out a mortgage for 130K, then, when our current house sold, either:
1)refinanced (paying all those costs again...) or...
2)put that lump sum down on the principal which would have kept our payments high, but shortened the length of our loan

So maybe you should take out a longer term loan, and then, when your curent house sells, do one of the two as shown above?

And we are going to be "homeless" for at least a few weeks, because we are trying to get our current house ready to sell right now, and won't close on the new one until the first week of November. Everything is getting packed away, and we are staying at a friend's summer house. Not fun, but the way it's got to get done.

Hope that helps!

Terri

 

[Anthony1971]

So long as you can prove to the banks standards the 20% in equity will be provided by the sale of your current house you should get an approval barring your credit and ability to pay the new Mortgage. Bottom line is when closing day comes and you do not have the 20% the bank will not issue the check for the Mortgage leaving you paying the fees with nothing to show.

 

[eliza61]

No that is not true. I am loan processor, and have 3 files closing tomorrow, all are selling their current homes they same day, and using the proceeds for closing.

Wow, I got my mortgage through PNC and I got another offer through my credit union. Both companies specifically forbid that transaction. In big bold letters on my origination documents. lol

If I was selling an house and using the proceeds for any part of the transaction on the new mortgage, all proceeds, fees, cash etc had to be cleared for 72 hours PRIOR to the closing on the new house.
they would have delayed my closing. I never questioned the why behind that, I just assumed because the down payment is supposed to be unencumbered. what would happen if you signed on for the new mortgage and go to closing on your old house and for some reason it falls through? I know of an experience where the buyers simply did not show up for the closing. Poor seller was in agony.

We just sold my dad's home in NYC and while it finally went through, we were there for almost 8 hours. buying originally told us he was going to pay cash, got to the closing with his attorney and then decided he wanted to finance 40% WTH!!!



Op, Anthony has the best advice, go to your prospective mortgage company and explain to them specifically what you will be doing. I would also make sure that you get to a mortgage processer because with my bank, a lot of the information that my loan officer (they guy who actually took my information and was the warm body at the bank) was different from what I needed at closing. I found that when I spoke with the people in the office that processes the loan I got more accurate information.

 

[elgerber]

what would happen if you signed on for the new mortgage and go to closing on your old house and for some reason it falls through? I know of an experience where the buyers simply did not show up for the closing. Poor seller was in agony.
.

The previous home sales close earlier in the day, they close the current home, get the check, and bring that check to the closing for the current home. I have been processing for 13 years, and we do this all the time, it's extremely common. We would never allow the buyer to close on the new home before they have the check from their sale earlier in the day. Yes, we have issues where something happens with the first sale, that messes up the other transactions, but then they are delayed. But it is not forbidden to structure this way.

 

[eliza61]

The previous home sales close earlier in the day, they close the current home, get the check, and bring that check to the closing for the current home. I have been processing for 13 years, and we do this all the time, it's extremely common. We would never allow the buyer to close on the new home before they have the check from their sale earlier in the day. Yes, we have issues where something happens with the first sale, that messes up the other transactions, but then they are delayed. But it is not forbidden to structure this way.

cool. I wasn't imply that it doesn't get done, just recommending what previous poster said and that would be to check with each mortgager.

Like I said I just closed in January on my new house and I was specifically told funds had to be free and clear for 72 hours with no type of contingencies. they would have cancelled 3 days earlier had the old sale not gone through.

LOL, I don't think my nerves could take cutting it so close anyway so it was for the best in my case.

 

[Darcy03231]

OP, we just did this. We applied for a mortgage when our house went under contract, so technically our house hadn't sold when we applied for the mortgage. We hadn't even found a house we wanted to buy at that point. Luckily, it only took us a month to find a house that we liked and we closed a couple of weeks ago.

 

[CSchex]

2 years ago I sold my house, and used the proceeds to put a down payment on the new one. We had no other cash available, just the proceeds from the sale of the house. Our bank did not allow same day closing. We had to wait 48 hours. My sister is a closing specialist, over 90% of the closings they do are same day. It can be done, and it is very common. Either way, you don't have to sell your home first, before you can qualify for a loan. You just need to let them know what is the expected profit and your final loan processing will be contingent on the actual sale taking place.

 

[jessica52877]

This is an interesting topic at the moment to me. We are trying to move but I can't figure out how to make it work. How do I sell my house and buy another and make it all work out time wise? I know people do it all the time but as of right now my understanding is the bank won't preapprove us until this house is out from under our names. It is the only debt we have, credit scores in the 800's and I'm just lost!! House after house keeps slipping by because we don't have a pre approval from anyone. We'll also be walking away with $ from the sale.

????

 

[clutter]

This is an interesting topic at the moment to me. We are trying to move but I can't figure out how to make it work. How do I sell my house and buy another and make it all work out time wise? I know people do it all the time but as of right now my understanding is the bank won't preapprove us until this house is out from under our names. It is the only debt we have, credit scores in the 800's and I'm just lost!! House after house keeps slipping by because we don't have a pre approval from anyone. We'll also be walking away with $ from the sale.

????

Four years ago, I purchased a new home by putting a credit line on the old, using the proceeds and some cash I had to close on the new one at 80%. After I moved out, I put the old house on the market. I was able to qualify for the sum of all of the payments, so it worked. After I sold the old home, I made a large payment to the bank and had them 're-set' the loan to amortize at the lower amount. Most banks will allow that one time for a fee.

 

[DisneyTexan]

Some of the reason that this is a confusing question on these boards is that the laws and regulations vary from state to state. There is not a national set of laws and regulations on how mortgage closings are conducted. On top of that, standards can vary from one mortgage company to another.

 

[DVCcurious]

I am not a mortgage processor.

However I do have common sense. Let's suppose this was true: that you had to have cash-in-hand before you'd be approved for a new mortgage and you couldn't use the proceeds for selling your current home, unless you've already sold it and have the cash.

How would ANYONE ever be able to move? Think about it, it would literally be impossible. You save up 20% down to buy your first home. You live there for a few years and build up equity. You'd like to move but you have to come up with a new 20% down and you can't use your current equity.

There are very, very few people who could accomplish such a savings goal. The entire housing industry would stagnate.

This one just doesn't pass the smell test.

 

[mhf]

Please also check with your tax advisor/accountant on the profit from your sale before you do this transaction. I'm not a tax guru but I do know there are rules out there about selling one house for a profit and buying another with the proceeds and how much tax you can avoid (or not).

 

[supersnoop]

Please also check with your tax advisor/accountant on the profit from your sale before you do this transaction. I'm not a tax guru but I do know there are rules out there about selling one house for a profit and buying another with the proceeds and how much tax you can avoid (or not).

As long as you lived in the house for two of the past five years, you are exempt from federal capital gains taxes on up to $250,000 of profit, or $500,000 if married filing jointly. That's profit, not sales price.