Okay, I hope I can ask this clearly and I hope it doesn't sound stupid because I'm really not financially illiterate, just never done this before!
We will likely be putting our house on the market in the next few months. My dh will be looking for a new job that won't be close to where we live now. We've only bought one home (our current one) and have never sold a home. This is my scenario:
We will probably end up moving into a new home before our current one is sold/closed. When we do sell our home, we will likely profit $25-$30K that we would like to put down on our new house. How does that work if the new home is already purchased/closed? Do you just have to refinance? It seems silly to refi a few months after closing, but I guess I don't see any other way of doing it. How does this work?
I hope that makes sense. I appreciate any info on this whole switching houses and downpayment thing. When we bought oure current house, we just had our downpayment and wrote a check. This time, we won't have the 'check' until our current house sells. ???? TIA

By Pamt on Thursday, October 20, 2005 - 09:50 pm:

I'm confused about the down payment. Do you have a down payment already and the check from your current house would just be "gravy" or do you want the check from your current house to serve as a delayed down payment of sorts?

By Reds9298 on Thursday, October 20, 2005 - 09:55 pm:

I want the check from my current house to serve as a delayed down payment. That's a good way of putting it.

By Katherine on Thursday, October 20, 2005 - 10:04 pm:

I am in the mortgage business and I have never heard of a "delayed" down payment. If you qualify for the two mortgage payments while you are selling your other home, so can take that lump sum and put it toward your principal balance, but, do not refinance just months after you move because you will have to pay closing costs all over again.

The lump payment on your mortgage would help you get out of paying private mortgage insurance sooner, but, if you put less than 20% down on your new home, you will have to keep the PMI for two years.

If you have any questions that I could answer for you, please feel free to ask me anything.

By Yjja123 on Thursday, October 20, 2005 - 10:05 pm:

You need to schedule both closings for the same day.

By Reds9298 on Thursday, October 20, 2005 - 10:11 pm:

Thanks Katherine. I know there's no delayed down payment, I just thought that was a good way of clarifying what I meant about not having the downpayment in hand when you closed on the new house.

I'm not sure what you mean though. I have no doubt we will qualify for the two mortgages, but we won't have a lump sum until we sell the first house, see? I definitely do not want to refi right away, but I don't understand it.

Example: (easy numbers) New house is $100K and closed on. You know you'll be getting $50K profit from old house when you sell it, but it doesn't sell until 3 months later. Once old house sells and you have the $50K, how do you put it toward the new house? How do you avoid PMI since you don't have the $50K yet?
Does that make sense? I know this is confusing, that's why I don't get it!!!

By Pamt on Thursday, October 20, 2005 - 10:12 pm:

I would just make an offer on a house that was contingent upon selling your current house. You can't use the money you get from selling your house until you actually sell the house. I certainly wouldn't assume 2 mortgages because you could get in really hot water financially.

By Ginny~moderator on Thursday, October 20, 2005 - 10:20 pm:

Deanna, since Katherine has expertise in this area, I suggest you consult with her off the board where you can go into details you probably wouldn't want to make public knowledge. If she is willing, maybe you can even consult with her by telephone, which is sometimes better than e-mail for a complicated topic like mortgages and closings and PMI.

Otherwise, I suggest you talk to your potential mortgage company for your new house.

I know that people do carry two mortgages for a few months when they are in your shoes - buying a new house in a new area before the old house is sold and goes to settlement - and I think it usually works out IF your monthly income can cover both payments. But that is a potentially big "if", and I think you need expertise that is based on your specific facts.

By Reds9298 on Thursday, October 20, 2005 - 11:15 pm:

Thank you everyone. Carrying two mortgages is not the end of the world, although it won't be fun needless to say. I don't really see any other way. Scheduling the closings on the same day sounds like a nice idea, but one will be in IN and one will likely be in another state. In addition, my dh will need to start his new job in a new state, prior to ANY closings. He could just stay in a cheap apt. until we sell, but that could be months! The market here is not very good and we'll be surprised if we sell our house sooner rather than later. NOTHING is moving in real estate here at the moment.

That's what I thought Pamt...that you can't use the money until the house is sold.

It may be such a thing that we have to drastically reduce the selling price of our home to move it quickly. We could also rent it, but being (likely) out of state, that just doesn't seem like a good idea to me.

At least now I know there's no possible contingencies with the bank and this so-called "delayed downpayment".

By Pamt on Friday, October 21, 2005 - 12:04 am:

When we moved from MO to LA it took 5 months for our house to sale. We moved into a rental house for 9 months, began looking in earnest for a house once we had that big equity check. Finding a house, getting all the financing taken care of, and getting a closing date took a couple of months after the fact. We were never saddled with 2 mortgage payments though. That would terrify me personally. However, we were also very fortunate in that our church here (DH is a minister) agreed to pay our mortgage in MO for 6 months or until it sold, whichever came first. It sold at month 5--whew!

Good luck to you!! Hopefully, your house will sell quickly and painfully and you will have asked these questions for naught. Where are you moving?

By Karen~moderator on Friday, October 21, 2005 - 07:51 am:

Another option would be to schedule the closing on the house you are selling a day or so before the closing on the house you are buying, and giving the attorney your husband's POA = I *think* that can be done.... Katherine??

My boss did a bridge loan when he was buying/selling his home last year, but he paid off the new mortgage when he sold the old home. Must be nice, huh? LOL

Deanna, I agree with Ginny though, if both you and Katherine are willing, perhaps a phone conversation might be in order! We don't bite! LOL I've spoken with several people from this board, and speak to one of them in particular quite often. I know others have made friends through this board too, simply by giving/getting advice. Might be worth a shot!

By Kaye on Friday, October 21, 2005 - 08:11 am:

Okay when I read this I thought of getting a "bridge loan". I don't know the specifics of who is eligible to do that though. A friend of mine got an equity loan on her house, for the amount of equity they had. You cannot have your house on the market when you do this. Then take that money, use it for your downpayment, then when you get you house listed and sold you pay off that loan. We have done bridge loans before.

By Trina~moderator on Friday, October 21, 2005 - 08:16 am:

I think most people take PamT's approach, if unable to sell their house right away. They rent in the new area while looking at real estate and buy a house after their former one sells.

When we moved from NH to CT we were fortunate enough to sell our former house quickly and time the closing of our current house so that we didn't need to live in temporary housing. However, things don't always work out that smoothly.

Also, if my DH were looking for a new job we would definitely not put our home on the market until he was officially hired for a new position. I apologize if I read that wrong, but your post looks like you're going to sell your current house and then your DH will be looking for a new job. Or maybe I'm just not awake yet. LOL!

By Vicki on Friday, October 21, 2005 - 08:22 am:

The same thought that Kaye has is what I was thinking too. Dh is also in the mortgage business and I have heard him talk of people doing that too. Get a home equity loan on your current house and use that money for the down payment on your new house. I would caution you to not take ALL the equity in your current house because that way, if you have to take a little less for you home, you won't have to pay out of pocket to sell. Keep in mind you also have taxes etc to bring up to date when you sell. So, you could take some of the equity in your home, but at the same time, leave enough of a spread there to cover selling costs.

By Reds9298 on Friday, October 21, 2005 - 08:57 am:

Thanks again everyone. Trina-We aren't putting the house up for sale until dh gets a job. I've never heard of a bridge loan, but might be something to look into.

Dh and I were talking lastnight and pretty much decided that renting was a good option for us. (What Pamt did when they moved) We also may get a relocation package from the new company. We got a large relocation package for dh's first job, and it actually covered double mortgages for a specific length of time (although we didn't own a home at that time). Don't know what will happen with a new job though, but that's a possibility. If there isn't anything like that, we will still have 2 house payments, but it will give us time to sell our house AND get to know the area better so we can make a better decision when buying the new house.
Pamt- We don't know where we're moving yet! Dh is going to start looking over the holidays. His company has filed bankruptcy and although nothing will 'happen' for many months, we're getting out early. I'm the planner around here and I'm just trying to get an idea of how this switching houses thing might work. You're right...it may be totally for naught!

By Debbie on Friday, October 21, 2005 - 09:05 am:

I think renting, like PamT suggested, is a good idea. It will also give you a chance to get to know the area and decide where you want to purchase a home.

You can get a bridge loan. I don't know all the specifics. But, I had a friend do this. Basically, you get a loan on the equity of your current home, so you can put it towards your new home. Then, when you sell your current home, you take your equity from it and pay off the bridge loan.

By Ginny~moderator on Friday, October 21, 2005 - 10:46 am:

The thing with renting is that while you are usually tied into a lease of some sort (even month to month requires some notice) it is by no means the same risk as carrying two mortgages.

By Tklinreston on Friday, October 21, 2005 - 04:11 pm:

Hi Deanna. I am in the title/closing business and in the scenario which you describe most of my clients take out a HELOC ("home equity line of credit") on their current home for the amount that they need for the down payment and to cover any anticipated expenses during the interim period - if needed. Once you sell you would just payoff all loans tied against your current home. You just have to make sure you can afford not only the two first mortgages but also the minimum monthly payment on the HELOC, which is just the finance charge. As many have suggested above unless you absolutely HAVE to buy first, it's best to wait. Most of my clients had a ratified contract on the sale of their home but their buyer needed more time for their closing. If you have any questions, I will be happy to assist in anyway I can. You can email me at jlee@chung-press.com. Best of luck.

By Reds9298 on Friday, October 21, 2005 - 04:54 pm:

Thank you a lot for the info Joyce. Unless of course everything goes super smoothly and we sell our house quickly, I think we are going to try to rent for a while. You have been very informative though and now I have some ideas to keep in mind. Thanks

By Cocoabutter on Friday, October 21, 2005 - 07:54 pm:

Didn't read all the responses, cuz this stuff confuses me too.

We are trying to sell our house as well, and we have an offer in on a new house that is contingent on selling our old one.

The first thing I would do is ask the mortgage consultant that you are getting your new mortgage through if a down payment is required to close. If it is, you will most likely have to wait to purchase the new home until you sell your old one. Our new mortgage company won't require us to put a down payment on the new loan, but we are going to anyway.

But from what I have heard, at least in our area, the housing market is flat. Builders in our area have been "bullish" in a bear market. Meaning that they have built too many new houses for a housing market that is slow. On the news the other night, they interviewed a builder who said, "Lots of people have said that they would buy one of my houses if only they could sell their old one."

Check with your real estate agent on the market in your area and see how long it could take to sell. If the market is flat in your area, you don't want to risk assuming the responsibility for two mortgage payments for an indefinite amount of time.

By Amecmom on Saturday, October 22, 2005 - 09:14 am:

A HELOC sounds great! Renting is nice in theory, but it has always seemed to me like money thrown away. You could be using it to pay your new mortgage ... Also, there are a lot of costs associated with a temporary move that you will not recover - utility set up, phones, cable, the cost of moving twice! Storage for your stuff, etc.
There's a lot to consider ...
Ame