Buying a house, when you own a house (1 Viewer)

[Dentist]

I've only bought one home in my life, and the time is coming next year to upgrade the home.

So it will be my first time selling a home as well.

I'm not moving far, probably within 5 sq. miles of my current home, just to a nicer neighborhood, better yard for the boys, etc.

Any tips regarding if I should buy a home first, then sell.. how to work the mortgage, etc. would be appreciated.

I'm planning to use some of the ideas from the other big real estate thread to try at first listing my own home...

I'd also like to avoid displacing my family into any temporary housing.

Anyway... i'll hang up and listen.

 

[AcerFC]

I would think you want to sell first so you are not carrying two mortgages

Unless you can pay cash. Dentists make good dough

 

[Dentist]

I would think you want to sell first so you are not carrying two mortgages

Unless you can pay cash. Dentists make good dough

I don't mind carrying a second mortgage, I could afford that.

As an alternative, i could just write a check and own my current home, and then make it a little easier... I'd still have the 20% for what I expect to pay for the new home.

My concern is how you then use the proceeds from the sale.... I'd love to stick with a 15 year mortgage if possible.

My other concern is that I'm pretty sure I've read that the home value declines some when you aren't staging it with current furniture and stuff.

 

[jwb]

Yea, it all hinges on how you are financially in regards to having two mortgages for awhile.

If you can, it's easy - get your house ready to sell as you're looking for a new home, move in, then sell yours.

If having two mortgages sounds crippling financially, then you have to sell first or stress the timeframes / deal with people bailing / etc.

Personally, if I were to do this, I'd float two for awhile, as I'll trade a few dollars for less stress.

 

[McGarnicle]

Sorry man, sounds rough. I hope things turn around for you soon GB. Positive vibes sent.

 

[Arsenal of Doom]

We're right in the middle of this. Sold our house on 12/31 and close on our new one on Wednesday this week. We were in a great position where the price range we were selling out of was a much hotter market, so we were able to arrange a rent-back on our current house. That gave us plenty of time to find the house we wanted and we'll have most of the month of Feb to move a few miles across town.

New lending rules just went in Oct. last year that apparently made it harder to line up closing at the same time, so a rent back or being ready to carry two mortgages (at least for a short time) is probably the best plan.

 

[avoiding injuries]

Save yourself the hassle and spend 5% on a realtor. I did FSBO on my first house too.

 

[Dentist]

We're right in the middle of this. Sold our house on 12/31 and close on our new one on Wednesday this week. We were in a great position where the price range we were selling out of was a much hotter market, so we were able to arrange a rent-back on our current house. That gave us plenty of time to find the house we wanted and we'll have most of the month of Feb to move a few miles across town.

New lending rules just went in Oct. last year that apparently made it harder to line up closing at the same time, so a rent back or being ready to carry two mortgages (at least for a short time) is probably the best plan.

What is a rent back?

 

[Dentist]

Sorry man, sounds rough. I hope things turn around for you soon GB. Positive vibes sent.

Thanks, it's a horrible situation, hopefully i'll find my way out of it.

 

[Dentist]

Save yourself the hassle and spend 5% on a realtor. I did FSBO on my first house too.

really? you did it and it worked and you wished you had a realtor?

 

[Cjw_55106]

We're right in the middle of this. Sold our house on 12/31 and close on our new one on Wednesday this week. We were in a great position where the price range we were selling out of was a much hotter market, so we were able to arrange a rent-back on our current house. That gave us plenty of time to find the house we wanted and we'll have most of the month of Feb to move a few miles across town.

New lending rules just went in Oct. last year that apparently made it harder to line up closing at the same time, so a rent back or being ready to carry two mortgages (at least for a short time) is probably the best plan.

What is a rent back?

Basically you sell them the house, but then rent it from them for an agreed upon timeframe.

 

[cubsmac]

Why not rent the current home after you move? Have somebody else pay the mortgage off, you build more equity and likely get a little extra spending money each month.

 

[jwb]

Why not rent the current home after you move? Have somebody else pay the mortgage off, you build more equity and likely get a little extra spending money each month.

For some people this could be good, but I couldn't imagine renting one home.

Renting ten homes and having a property manager handle all the stuff? Yea, fine. Renting one? Not worth the hassle (to me).

 

[Arsenal of Doom]

We're right in the middle of this. Sold our house on 12/31 and close on our new one on Wednesday this week. We were in a great position where the price range we were selling out of was a much hotter market, so we were able to arrange a rent-back on our current house. That gave us plenty of time to find the house we wanted and we'll have most of the month of Feb to move a few miles across town.

New lending rules just went in Oct. last year that apparently made it harder to line up closing at the same time, so a rent back or being ready to carry two mortgages (at least for a short time) is probably the best plan.

What is a rent back?

Basically you sell them the house, but then rent it from them for an agreed upon timeframe.

Exactly. Basically allowed us to close on our existing house first and only move once.

 

[avoiding injuries]

Save yourself the hassle and spend 5% on a realtor. I did FSBO on my first house too.

really? you did it and it worked and you wished you had a realtor?

This was 10 years ago and your region may be different. Realtors would boycott showing my home. In the price range I was selling, the buyers weren't as savvy and relied more on realtors to do everything for them. Plus, buyers expect to pay less bc you're not paying a realtor, so how much are you really saving?

 

[Dentist]

Save yourself the hassle and spend 5% on a realtor. I did FSBO on my first house too.

really? you did it and it worked and you wished you had a realtor?

This was 10 years ago and your region may be different. Realtors would boycott showing my home. In the price range I was selling, the buyers weren't as savvy and relied more on realtors to do everything for them. Plus, buyers expect to pay less bc you're not paying a realtor, so how much are you really saving?

well I'd still probably offer the 2.5% to a buying agent... so i guess i'd save about 3.5% or 7800? that seems like decent cash

I'm not sure if my region is any different.

 

[Cjw_55106]

Why not rent the current home after you move? Have somebody else pay the mortgage off, you build more equity and likely get a little extra spending money each month.

For some people this could be good, but I couldn't imagine renting one home.

Renting ten homes and having a property manager handle all the stuff? Yea, fine. Renting one? Not worth the hassle (to me).

There are companies that will do it for you for a reasonable sum. They rent it, collect the rent, repair damages, etc. You get the payment.

 

[avoiding injuries]

Save yourself the hassle and spend 5% on a realtor. I did FSBO on my first house too.

really? you did it and it worked and you wished you had a realtor?

This was 10 years ago and your region may be different. Realtors would boycott showing my home. In the price range I was selling, the buyers weren't as savvy and relied more on realtors to do everything for them. Plus, buyers expect to pay less bc you're not paying a realtor, so how much are you really saving?

well I'd still probably offer the 2.5% to a buying agent... so i guess i'd save about 3.5% or 7800? that seems like decent cash

I'm not sure if my region is any different.

That was my thought too, and I offered to pay the buyers agent as well. Good luck.

 

[Bob Loblaw]

I've been in this scenario twice. Both times were done on a "contingent-basis". First we had to have a realtor signed and ready to put our existing house on the market. Second, find your replacement home and put a contingent offer down. "I can buy your house on the contingency that I sell my house." It worked out both times for us, but very stressful. You work it out with the escrow company to transfer the proceeds from selling your house to the down payment of your replacement. We needed to rent back both times for about a week. You disclose your need to rent back to any potential buyers. If they want you to accept their offer, they'll accept your contingency to rent back. It helped having the same agent for both selling our house, and buying the replacement.

If you can buy your replacement first, carry two mortgages, and then sell your existing house, then I'd do that. You'd probably get a better offer for your existing house also since you'd be selling in the spring when the market is better.

 

[General Malaise]

I've only bought one home in my life, and the time is coming next year to upgrade the home.

So it will be my first time selling a home as well.

I'm not moving far, probably within 5 sq. miles of my current home, just to a nicer neighborhood, better yard for the boys, etc.

Any tips regarding if I should buy a home first, then sell.. how to work the mortgage, etc. would be appreciated.

I'm planning to use some of the ideas from the other big real estate thread to try at first listing my own home...

I'd also like to avoid displacing my family into any temporary housing.

Anyway... i'll hang up and listen.

When we found out my wife was pregnant with twins (not planned) I knew we needed a bigger house. There was one two doors down that was much bigger, had been on the market for 6 months and despite having great bones, needed a LOT of work. I knew the lady that lived there and when she passed, her son and his wife moved in and just treated the place like a toilet. Cigarettes in the fire place, chunked up the original hardwood floors, just gross.

But, we love the neighborhood and knew we could do the work we wanted on this much larger home. We also got a smoking deal on this house as they accepted our low bid. I ended up getting a HARP loan, put 3.5% down and we were able to remain in our old house while we oversaw the work in the new house. That was a real blessing as we didn't have to live in a remodel, could walk back and forth to check the progress and make any adjustments and could slowly pack up our things for a move.

Once we were getting down to the end of the remodel, we listed our house. Despite being much smaller, we ended up selling it for $15K more than what we paid for the bigger house. It sold in 3 weeks. I enlisted the help of friends, hired a small crew to lift the heavy furniture and we were able to pull off the move with ease.

It sucked having two mortgages for a few months, but we budgeted for it. I got the house re-appraised after dumping $85K into it, got it appraised at $100K more than what we bought it for, refinanced with a conventional mortgage at a great rate and the rest is history. I would do it just like that all over again if the situation called for it.

 

[Random]

When we did our only move, we bought our new house and moved before we sold the old one. Certainly, this is the easiest way to go if you can (and are willing to) swing 2 house payments.

 

[Van Dyman]

I've only bought one home in my life, and the time is coming next year to upgrade the home.

So it will be my first time selling a home as well.

I'm not moving far, probably within 5 sq. miles of my current home, just to a nicer neighborhood, better yard for the boys, etc.

Any tips regarding if I should buy a home first, then sell.. how to work the mortgage, etc. would be appreciated.

I'm planning to use some of the ideas from the other big real estate thread to try at first listing my own home...

I'd also like to avoid displacing my family into any temporary housing.

Anyway... i'll hang up and listen.

When we found out my wife was pregnant with twins (not planned) I knew we needed a bigger house. There was one two doors down that was much bigger, had been on the market for 6 months and despite having great bones, needed a LOT of work. I knew the lady that lived there and when she passed, her son and his wife moved in and just treated the place like a toilet. Cigarettes in the fire place, chunked up the original hardwood floors, just gross.

But, we love the neighborhood and knew we could do the work we wanted on this much larger home. We also got a smoking deal on this house as they accepted our low bid. I ended up getting a HARP loan, put 3.5% down and we were able to remain in our old house while we oversaw the work in the new house. That was a real blessing as we didn't have to live in a remodel, could walk back and forth to check the progress and make any adjustments and could slowly pack up our things for a move.

Once we were getting down to the end of the remodel, we listed our house. Despite being much smaller, we ended up selling it for $15K more than what we paid for the bigger house. It sold in 3 weeks. I enlisted the help of friends, hired a small crew to lift the heavy furniture and we were able to pull off the move with ease.

It sucked having two mortgages for a few months, but we budgeted for it. I got the house re-appraised after dumping $85K into it, got it appraised at $100K more than what we bought it for, refinanced with a conventional mortgage at a great rate and the rest is history. I would do it just like that all over again if the situation called for it.

Congrats on a well-executed plan. Why refinance it, though? Had the rates dropped that much in a few months since you bought it?

 

[General Malaise]

I've only bought one home in my life, and the time is coming next year to upgrade the home.

So it will be my first time selling a home as well.

I'm not moving far, probably within 5 sq. miles of my current home, just to a nicer neighborhood, better yard for the boys, etc.

Any tips regarding if I should buy a home first, then sell.. how to work the mortgage, etc. would be appreciated.

I'm planning to use some of the ideas from the other big real estate thread to try at first listing my own home...

I'd also like to avoid displacing my family into any temporary housing.

Anyway... i'll hang up and listen.

When we found out my wife was pregnant with twins (not planned) I knew we needed a bigger house. There was one two doors down that was much bigger, had been on the market for 6 months and despite having great bones, needed a LOT of work. I knew the lady that lived there and when she passed, her son and his wife moved in and just treated the place like a toilet. Cigarettes in the fire place, chunked up the original hardwood floors, just gross.

But, we love the neighborhood and knew we could do the work we wanted on this much larger home. We also got a smoking deal on this house as they accepted our low bid. I ended up getting a HARP loan, put 3.5% down and we were able to remain in our old house while we oversaw the work in the new house. That was a real blessing as we didn't have to live in a remodel, could walk back and forth to check the progress and make any adjustments and could slowly pack up our things for a move.

Once we were getting down to the end of the remodel, we listed our house. Despite being much smaller, we ended up selling it for $15K more than what we paid for the bigger house. It sold in 3 weeks. I enlisted the help of friends, hired a small crew to lift the heavy furniture and we were able to pull off the move with ease.

It sucked having two mortgages for a few months, but we budgeted for it. I got the house re-appraised after dumping $85K into it, got it appraised at $100K more than what we bought it for, refinanced with a conventional mortgage at a great rate and the rest is history. I would do it just like that all over again if the situation called for it.

Congrats on a well-executed plan. Why refinance it, though? Had the rates dropped that much in a few months since you bought it?

I wanted out of the HARP loan. My monthly payment was lowered too. And if I need it, we can consider a HELOC.

 

[RUSF18]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

 

[dino259]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

 

[Dentist]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

Thanks.. do you guys think i should just pay off my current mortgage and then just take all the proceeds from the sale and apply it to the new mortgage, or keep more cash readily available and pay two payments for awhile?

 

[Van Dyman]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

That's what I did. No stress, no worries. After the old place sold I recast (re-amortized) the mortgage to reduce the monthly payments. Very easy.

ETA: link for mortgage recast, might be useful

 

[General Malaise]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

Thanks.. do you guys think i should just pay off my current mortgage and then just take all the proceeds from the sale and apply it to the new mortgage, or keep more cash readily available and pay two payments for awhile?

You buying turnkey ready or do you envision doing some work on the new place? Obviously, hard to tell dealing in the abstract, but to the extent you and the wife want new appliances, different countertops, etc, I'd suggest having cash on hand.

 

[Dentist]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

That's what I did. No stress, no worries. After the old place sold I recast (re-amortized) the mortgage to reduce the monthly payments. Very easy.

ETA: link for mortgage recast, might be useful

thank you, this is really really helpful... i appreciate that.. i'd never heard of a re-cast

 

[Dentist]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

Thanks.. do you guys think i should just pay off my current mortgage and then just take all the proceeds from the sale and apply it to the new mortgage, or keep more cash readily available and pay two payments for awhile?

You buying turnkey ready or do you envision doing some work on the new place? Obviously, hard to tell dealing in the abstract, but to the extent you and the wife want new appliances, different countertops, etc, I'd suggest having cash on hand.

I really want to buy a place that's ready to go. I anticipate the wife wanting some new furniture as the new place will probably be a bit bigger

 

[Chadstroma]

I think it is all on what you prefer really since I think you have the financial situation in place that you can do what you want (from what I take from other board discussions).

You can do it many different ways....

Buy then sell or sell then buy etc.

I think the important thing is really more about finding the right house to buy first and not feeling rushed into something. You can or can not put your current house for sale. If you haven't found anything you can be real picky on offers presented or offer an extended closing date. Worst case scenario is that you get an offer you can't refuse and then you move stuff in storage and hang out in long term hotel until you find the right place.

 

[gianmarco]

Not sure if it's an option, but have you considered building? If not in a rush to move, it can give you some flexibility.

I'll also 2nd the idea of renting out your current home once you find a new home. You don't have to rent it permanently, but you can do so when you move so that the 2nd mortgage is paid and then you can list it whenever you want. If you hate being a landlord, list it shortly afterward. If you like the income and find good tenants and it isn't a big deal, do it longer.

 

[acarey50]

Assuming you can afford the two mortgages (and considering you have the cash to just pay off your current one it stands to reason that you do) I'd just carry the two mortgages.

Move and get settled into the new place.

Then worry about selling the old home. Since you aren't truly burdened by the second mortgage, you can negotiate a selling price from a position of power (rather than desperation) and not feel like you have to settle on the first offer you get if you feel it is low just to get out from under the mortgage.

The one time we moved we did it all on contingency basis (ie our offer to buy was contingent on the offer to sell our house going through, etc.) It all worked out, but it is much more stressful as there are a lot of moving parts involved.

 

[Dentist]

Not sure if it's an option, but have you considered building? If not in a rush to move, it can give you some flexibility.

I'll also 2nd the idea of renting out your current home once you find a new home. You don't have to rent it permanently, but you can do so when you move so that the 2nd mortgage is paid and then you can list it whenever you want. If you hate being a landlord, list it shortly afterward. If you like the income and find good tenants and it isn't a big deal, do it longer.

No, I don't want to build, my wife and I had enough stress just making a few decisions when we did a kitchen remodel a few years back... building a home would lead to certain divorce.

 

[xulf]

Temporary housing with kids is no fun. Go with the two mortgages.

 

[General Malaise]

Common sense alert, but around here (and I'm sure most of the country) you want to BUY in the winter and sell in the summer, so....tick tock.

 

[Dentist]

Common sense alert, but around here (and I'm sure most of the country) you want to BUY in the winter and sell in the summer, so....tick tock.

Thanks.. i'll buy next winter... this is a project for '17.. I just want to get all my financial ducks in a row before I do this

 

[Dentist]

Temporary housing with kids is no fun. Go with the two mortgages.

sounds like this plus the recasting idea which is my favorite thing I didn't know about that I learned from starting this thread (I already got my money's worth!) is the way to go.

 

[JoeSteeler]

Sorry man, sounds rough. I hope things turn around for you soon GB. Positive vibes sent.

 

[tonydead]

Sounds like you have enough equity for a HELOC. You wouldn't even need to break into your piggy bank, but if you do just pay off the first mortgage.

 

[Chadstroma]

Sounds like you have enough equity for a HELOC. You wouldn't even need to break into your piggy bank, but if you do just pay off the first mortgage.

Yea, but usually there will be a fee in closing the HELOC from the sell. Most banks will charge something around $300-500 for the first couple of years if the line is closed. I did know of a bank before that let you pay the closing costs up front and avoid a closing fee later, with the closing costs being around $100-200. So, it is an option but just make sure you know the final cost and factor that in.

 

[cubsmac]

Why not rent the current home after you move? Have somebody else pay the mortgage off, you build more equity and likely get a little extra spending money each month.

For some people this could be good, but I couldn't imagine renting one home.

Renting ten homes and having a property manager handle all the stuff? Yea, fine. Renting one? Not worth the hassle (to me).

There are companies that will do it for you for a reasonable sum. They rent it, collect the rent, repair damages, etc. You get the payment.

Bingo. I pay a local company 10% of the agreed upon rental price for my original home, they're the landlord, collect rent, and direct deposit my portion to my bank acct each month. When there is an issue, they get the midnight call. And they have built up a long list of skilled workers that do repairs for very reasonable prices as they don't upcharge on parts.

 

[NFL-ons]

Thanks.. do you guys think i should just pay off my current mortgage and then just take all the proceeds from the sale and apply it to the new mortgage, or keep more cash readily available and pay two payments for awhile?

The only real "cost" to you in making the mortgage payment, as opposed to paying it off, is the monthly interest portion of your payment. Either way you will be responsible for taxes and insurance, and any portion of your monthly payment which goes to principal, you will recoup when you sell. So assuming you have a decent interest rate and/or are deep into the mortgage amortization, the interest portion of your payment should be minimal.

If you pay off you mortgage, a portion of your liquidity will be sacrificed. I can see many advantages in having the cash on hand as opposed to a paid off low interest rate mortgage, especially when entertaining the purchase of a new residence. The main one of these, though, would be the ability to make the new purchase with cash, if you can pull it off, instead of financing. The need to sell, quick closing cash deal is where money is made.

 

[Baloney Sandwich]

Seems like you're in the best situation imaginable. If you don't want to worry about temporary housing, or missing out on a great house, just buy the new place first, sell once you close on the new place, and carry both mortgages for a couple months. Think of that extra money as buying a whole lot of peace of mind. Just being able to take your time moving in/out is pretty nice.

This. Get your current house ready to sell and just buy where you want first and then sell the second. Especially you with the financial position to handle both mortgages.

Thanks.. do you guys think i should just pay off my current mortgage and then just take all the proceeds from the sale and apply it to the new mortgage, or keep more cash readily available and pay two payments for awhile?

I'm not sure there is a right answer here but if it was me I would just pay off the current mortgage provided that still left me with enough money for the 20% down payment once I found a new home.

 

[cstu]

My other concern is that I'm pretty sure I've read that the home value declines some when you aren't staging it with current furniture and stuff.

It's definitely preferable that the house has some furniture in it, but you don't need to go overboard with it. After you move out, paint the walls, get the carpets cleaned, etc. and rent a few pieces of nice furniture so people get an idea of what the home would look like when they move in.

 

[cstu]

Why not rent the current home after you move? Have somebody else pay the mortgage off, you build more equity and likely get a little extra spending money each month.

For some people this could be good, but I couldn't imagine renting one home.

Renting ten homes and having a property manager handle all the stuff? Yea, fine. Renting one? Not worth the hassle (to me).

There are companies that will do it for you for a reasonable sum. They rent it, collect the rent, repair damages, etc. You get the payment.

Bingo. I pay a local company 10% of the agreed upon rental price for my original home, they're the landlord, collect rent, and direct deposit my portion to my bank acct each month. When there is an issue, they get the midnight call. And they have built up a long list of skilled workers that do repairs for very reasonable prices as they don't upcharge on parts.

My wife does property management and trust me, the 10% is worth it to avoid the headache. If you aren't getting the return you want after paying 10% then I suggest selling the house. Dealing with tenants is a PITA unless it's something you actually enjoy ( ).

 

[cstu]

Dentist, on 08 Feb 2016 - 10:17 AM, said:

Thanks.. do you guys think i should just pay off my current mortgage and then just take all the proceeds from the sale and apply it to the new mortgage, or keep more cash readily available and pay two payments for awhile?

Paying off your current home will make it easier to buy your next house. After you do buy you can get sell the old house or re-fi your money out.