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Old 09-03-2020, 10:36 AM   #1
bigdog
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Default Selling home-Buying home, need advice !

I am in the process to sell my homes and down-size, and purchase a smaller residence. My dilemma is that I am ‘house rich and cash poor’.

Before I can buy purchase another home, I must sell my current home first. I was caught in this same senario several years ago, and took out a mortgage to buy my current home, before selling my house at the time, but was able to sell my other house about 5 months later. That scenario cost me several thousand dollars to get that mortgage, Closing costs, etc. When the house sold, I was able to pay-off that mortgage in cash.

I know my current house would sell quickly, but in the current housing market, I don’t think if I find another house to buy, that the seller would agree to a contingent clause in the contract, to wait until I sell my current house, not going to happen !

I cannot get another mortgage to buy my new home, as before, I am now retired, and no longer working, nor have the income I had when working.

Appreciate your thoughts, and ideas on how to move forward, with new home purchase.

Thanks !

Last edited by bigdog; 09-03-2020 at 10:37 AM. Reason: spelling
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Old 09-03-2020, 10:52 AM   #2
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Quote:
Originally Posted by bigdog View Post
I am in the process to sell my homes and down-size, and purchase a smaller residence. My dilemma is that I am ‘house rich and cash poor’.

Before I can buy purchase another home, I must sell my current home first. I was caught in this same senario several years ago, and took out a mortgage to buy my current home, before selling my house at the time, but was able to sell my other house about 5 months later. That scenario cost me several thousand dollars to get that mortgage, Closing costs, etc. When the house sold, I was able to pay-off that mortgage in cash.

I know my current house would sell quickly, but in the current housing market, I don’t think if I find another house to buy, that the seller would agree to a contingent clause in the contract, to wait until I sell my current house, not going to happen !

I cannot get another mortgage to buy my new home, as before, I am now retired, and no longer working, nor have the income I had when working.

Appreciate your thoughts, and ideas on how to move forward, with new home purchase.

Thanks !
I'm no expert but isn't that what a bridge loan is for? No idea on what the requirements are but something you may want to check into
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Old 09-03-2020, 11:05 AM   #3
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Formula260SS.....

I'm familiar with a 'Bridge Loan', but a loan still has to be repaid.

As I mentioned, I am no longer employed, but living on Social Security, a small pension, and have an Annuity which generates annual income , but probably not enough to support a new mortgage, and all the other basic monthly associated bills and necessities.

Still, will call the bank to discuss this option......

Thanks!
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Old 09-03-2020, 11:15 AM   #4
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No seller is going to agree to a "sell-to-buy" contingency in a market like this one, where people are sometimes paying more than sticker price for a home. A bridge loan could potentially be an option, but what if you're existing home doesn't sell for a while and / or it takes you a long time to find a new place? You still have to pay the interest on the bridge....

I would think your best bet is sell the existing home, pay off the mortgage, and then you are a cash buyer for the new place. The challenge with this, of course, is that you need to find temporary housing, whether it's a short-term rental, staying with family, etc.

There is no easy answer for the "have-to-sell-to-buy" scenario. All of the options have some form of risk and expense. You just have to settle on the one that is most in line with your appetite for risk and what you can afford.

Good luck!
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Old 09-03-2020, 11:17 AM   #5
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Not a great way to go, but ...

Sell your house first; then put your personal property in storage.

Move into a furnished rental while you search for and buy your new home.

Given the decent market you should be in the rental a short time, and you'd pay the rent using a portion of the sale proceeds from your home.

When the purchase of your downsized home is complete move your property out of storage and into your new home.

Like I said, not a great way to go but it should work.
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Old 09-03-2020, 11:21 AM   #6
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I agree with what MeredithMan is saying. The only thing I would add is consider selling your place with a leaseback option (i.e. you will pay the buyer rent). That would conceptually give you time to find a new place. Some buyers may balk but it can't hurt to ask especially given that the summer season is essentially over.
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Old 09-03-2020, 11:47 AM   #7
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I agree with what MeredithMan is saying. The only thing I would add is consider selling your place with a leaseback option (i.e. you will pay the buyer rent). That would conceptually give you time to find a new place. Some buyers may balk but it can't hurt to ask especially given that the summer season is essentially over.
That’s probably the best option, and I know several people who have done that with no problem. After the closing on your present home, you stay put, paying the new owner an agreed upon price, and then you are free to move ahead with a new purchase.
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Old 09-03-2020, 11:55 AM   #8
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I think your last home sales process might be the best option. The risk with selling then buying later is that the market may continue to climb while you no longer have an owned home. That leaves everything you look at climbing away from you in price. This happened to my sister a few years ago. The few thousand extra you spent last time might have been well worth it.
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Old 09-03-2020, 11:59 AM   #9
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Default Selling home-Buying home, need advice !

Quote:
Originally Posted by bigdog View Post
I am in the process to sell my homes and down-size, and purchase a smaller residence. My dilemma is that I am ‘house rich and cash poor’.

Before I can buy purchase another home, I must sell my current home first. I was caught in this same senario several years ago, and took out a mortgage to buy my current home, before selling my house at the time, but was able to sell my other house about 5 months later. That scenario cost me several thousand dollars to get that mortgage, Closing costs, etc. When the house sold, I was able to pay-off that mortgage in cash.

I know my current house would sell quickly, but in the current housing market, I don’t think if I find another house to buy, that the seller would agree to a contingent clause in the contract, to wait until I sell my current house, not going to happen !

I cannot get another mortgage to buy my new home, as before, I am now retired, and no longer working, nor have the income I had when working.

Appreciate your thoughts, and ideas on how to move forward, with new home purchase.

Thanks !
Let’s not complicate simplicity. Obtain a home equity line on your current home. Usually very low closing costs. Make sure the line is just enough to put a down payment on another home. As soon as you obtain the line start you buying and selling process and in this market it should be relatively easy to coordinate closing dates. I have done this is the past. It works well.


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Old 09-03-2020, 12:24 PM   #10
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Let’s not complicate simplicity. Obtain a home equity line on your current home. Usually very low closing costs. Make sure the line is just enough to put a down payment on another home. As soon as you obtain the line start you buying and selling process and in this market it should be relatively easy to coordinate closing dates. I have done this is the past. It works well.
Excellent suggestion.

The housing market does vary greatly. From day to day or year to year.

You could also put your stuff in storage and leach off relatives for a short time.

But as suggested above get a home equity loan. Don't use it until you find your "smaller" home. Then sell.

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Old 09-03-2020, 12:30 PM   #11
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Thanks for your feedback to all, great info !

I like idea of home equity loan approach, low cost interest rates, and low Closing costs, sometimes you can find 'no' closing costs.

The other option mentioned, selling now to get the highest price, and live in a rental until I 'Close' on new house purchase. I have a condo down in S.C, and could live there, until new home purchase, but buying new house from a distance or sight unseen is a challenge ! I know folks who have done this, but can also have negative results.

The one main issue I see, is housing inventory. I'm looking to purchase a home for under $300k, that's my challenge. When houses in this price-range come on the market, they seem to be going under contract within days !
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Old 09-03-2020, 12:35 PM   #12
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Originally Posted by bigdog View Post
I am in the process to sell my homes and down-size, and purchase a smaller residence. My dilemma is that I am ‘house rich and cash poor’.

Before I can buy purchase another home, I must sell my current home first. I was caught in this same senario several years ago, and took out a mortgage to buy my current home, before selling my house at the time, but was able to sell my other house about 5 months later. That scenario cost me several thousand dollars to get that mortgage, Closing costs, etc. When the house sold, I was able to pay-off that mortgage in cash.

I know my current house would sell quickly, but in the current housing market, I don’t think if I find another house to buy, that the seller would agree to a contingent clause in the contract, to wait until I sell my current house, not going to happen !

I cannot get another mortgage to buy my new home, as before, I am now retired, and no longer working, nor have the income I had when working.

Appreciate your thoughts, and ideas on how to move forward, with new home purchase.

Thanks !
You say homes as in more than one, was that a typo? Why don't you sell one and use that money to buy while you live in the other?
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Old 09-03-2020, 12:38 PM   #13
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You say homes as in more than one, was that a typo? Why don't you sell one and use that money to buy while you live in the other?
The other home is in South Carolina according to the above post.


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Old 09-03-2020, 12:38 PM   #14
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Default Heloc

I agree with Joey that as HELOC is sim ple quick and cheap. Find a good mortgage knowledgeable banker, somebody who specializes in residential financing to figure out options for your particular equity position and cash flow. Don't start moving money around until s/he has advised you. What seem like simple moves to you, or too many, can mess up your credit rating. God advice on this topic can get you a lower interest rate or better closing costs.
Even though interest rates are low, part of the offset is higher home prices. A financial planner might demonstrate to you that renting has advantages over owning, especially if you don't have cash for a new roof or new septic system that a landlord would likely be liable for. If you own a house and defer maintenance, there could be some big payouts needed to upgrade in order to sell.
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Old 09-03-2020, 12:54 PM   #15
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How about I go to your condo in SC for the winter and you stay in my Meredith home for the winter.😂

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Old 09-03-2020, 02:45 PM   #16
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Default HELOC thoughts...

If the HELOC is already in place, then yes, it is quick...you simply access the funds. However, if it is not set up, it can be time consuming. When we did it on our last house in MA through B of A, (who was the mortgage holder), it was almost two mos from when we started the process until "closing" (that was in 2015). It is also more debt that is outstanding as you go through the process....just a couple things to consider...
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Old 09-03-2020, 03:41 PM   #17
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If the HELOC is already in place, then yes, it is quick...you simply access the funds. However, if it is not set up, it can be time consuming. When we did it on our last house in MA through B of A, (who was the mortgage holder), it was almost two mos from when we started the process until "closing" (that was in 2015). It is also more debt that is outstanding as you go through the process....just a couple things to consider...
Agreed. That's why I suggest a consultation before taking any action. I did a HELOC through Navy Federal CU several years ago. Maybe two weeks? Some of these things take longer now because of high volume and delays in getting appraisals. One bank I deal with has gone to exterior only appraisals due to Covid, so things are getting quicker than they were 120 days ago, at least with that local (regional) bank.
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Old 09-03-2020, 06:39 PM   #18
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If you have another place to live I don't see much downside in selling your place now and buying one (as a cash buyer) when you find what you want. The market is as hot as it's been since I have owned up here. I thought of the HELOC option as well but I am not so sure timing the sale and purchase is as easy as suggested. Maybe it will be maybe it won't. What happens if your sales process gets delayed by something from a home inspection? Sure you could ask for more time from the seller of the place you are buying but they don't have to agree and if you don't have any contingencies in your offer (which it doesn't sound like you will) it may cost you. A cash buyer is in a much better bargaining position when making an offer on a home as well. Just some thoughts to consider.
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Old 09-03-2020, 07:28 PM   #19
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Everyone is a cash buyer. Seller receives cash at closing. Sellers don't care if you are saying I have cash and don't need mtge. Once when buying a condo in Boston the broker (I am a broker also), knowing this, said I had to be pre approved. Response, Maybe I will use my cash. Bought that condo eventually without problems since there were no others buyers in line.
Home equity loans are a nice option and I have used them many times for business and personal use. You only have to pay the interest and can also pay anything on the principle you care to. Really it is a difficult decision whether to sell then buy, use credit and buy then sell.
On down sizing I have one comment. We decided to down size from a 5,000 s/f house only to find that we were not comfortable in the new house, too small. Therefore, we bought another house, 3,385 s/f which is great. We continue to talk of down sizing but 2,600 to 2,900 s/f/is also too small for us.
Good luck on you venture.

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Old 09-03-2020, 08:11 PM   #20
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Woody38, I can assure you that sellers do care (or at least very much should care) whether the deal is a cash deal or subject to financing. Having been on the seller side of a house sale that fell through due to the buyer's not getting financing and having seen it with others it really does matter. The buyer having mortgage pre approval is nice but having them with funds on hand is nicer. If nothing else, the transaction can close significantly faster.
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Old 09-03-2020, 08:15 PM   #21
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Everyone is a cash buyer. Seller receives cash at closing. Sellers don't care if you are saying I have cash and don't need mtge. Once when buying a condo in Boston the broker (I am a broker also), knowing this, said I had to be pre approved. Response, Maybe I will use my cash. Bought that condo eventually without problems since there were no others buyers in line.
Home equity loans are a nice option and I have used them many times for business and personal use. You only have to pay the interest and can also pay anything on the principle you care to. Really it is a difficult decision whether to sell then buy, use credit and buy then sell.
On down sizing I have one comment. We decided to down size from a 5,000 s/f house only to find that we were not comfortable in the new house, too small. Therefore, we bought another house, 3,385 s/f which is great. We continue to talk of down sizing but 2,600 to 2,900 s/f/is also too small for us.
Good luck on you venture.

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Everyone is different. I raised 3 children and I never had a house bigger than 2500 sq ft.
My kids are all grown and on their own now. The house I live in now in Ma is a 2300 sq ft cape and we only use the first floor which is 1400 sq ft. The two bedrooms and bath on the second floor have been empty for 5 years now, no furniture.
So my wife and I would like to downsize to a 1500-2000 sq ft ranch with a 2 car garage.
3500 sq ft homes in my town today are $1,000,000 plus. 1000 sq ft ranches are $500,000 plus.
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Old 09-03-2020, 08:28 PM   #22
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How about I go to your condo in SC for the winter and you stay in my Meredith home for the winter.��

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Biggd.... I don't think you'd like my place in Hilton Head for the winter !

Maybe, I'll just go there this winter, and have my real estate agent here market my house here. If he comes up with a buyer, I'll fly home to pickup my bag of cash, and be in a better place to buy home at the lake for cash, even if it's during the winter !

Hmmmmm, I'm starting to reason this out, and making more sense to me !

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Old 09-03-2020, 09:04 PM   #23
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I honestly don't know too much about this but a friend of mine retired and took out something called a "reverse mortgage for purchase". She was in the process of selling her home in Missouri and buying one in the Mt. Washington area and learned of this and said it was the best thing ever.

She dealt with a company in New Jersey (she is originally from there). She had to put down a large down payment but after that nothing else ever. (She has no family so no issues with leaving an inheritance.) So she got to keep a lot of the proceeds of the sale of her former home, has no mortgage and can enjoy her home until her death.

We retired this year and we sold our 2600 square foot home on 10 1/2 acres in NY and had to rent a house for several months while our little 1100 square foot house on a teeny, tiny lot was being built in The Weirs. So had to move twice- hard- but at least we had the money ready when the house was finished.

My comment on downsizing is if you want this to be your last move (before the nursing home) plan like you are already 80 years old. Keep your new life simple. Think about stairs, grab bars, access to the laundry, the shower, ability to reach cabinets, low maintenance yard, closeness to friends, family and shopping and health care, etc.

And remember grandchildren eventually grow up so don't worry too much about having lots of room for everyone to sleep over. Eventually they won't and you will have excess space that needs to be heated and dusted. You'll be paying taxes on it as well.

With the home front being simple it leaves lots of time for enjoyable activities and hobbies and socialization.

Good luck!
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Old 09-03-2020, 09:53 PM   #24
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Check the details if you decide to go the HELOC route. I just took one out through Hanscom Federal Credit Union to help finance my workshop/side job 30x40 barn and there are some stipulations to selling the property after obtaining the line. My loan has no closing costs or fees as long as it is kept open for two years, if it is closed prior to that or the primary home is sold then there is a substantial closing fee passed on to you. It took about a month from application to closing for mine too.
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Old 09-03-2020, 10:47 PM   #25
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Quote:
Originally Posted by bigdog View Post
I am in the process to sell my homes and down-size, and purchase a smaller residence. My dilemma is that I am ‘house rich and cash poor’.

Before I can buy purchase another home, I must sell my current home first. I was caught in this same senario several years ago, and took out a mortgage to buy my current home, before selling my house at the time, but was able to sell my other house about 5 months later. That scenario cost me several thousand dollars to get that mortgage, Closing costs, etc. When the house sold, I was able to pay-off that mortgage in cash.

I know my current house would sell quickly, but in the current housing market, I don’t think if I find another house to buy, that the seller would agree to a contingent clause in the contract, to wait until I sell my current house, not going to happen !

I cannot get another mortgage to buy my new home, as before, I am now retired, and no longer working, nor have the income I had when working.

Appreciate your thoughts, and ideas on how to move forward, with new home purchase.

Thanks !
I think that I would RENT with the option to buy. Then, if and when you sell your existing home you can then immediately buy the home you are renting.

A very cheap solution, however it may be easier said than done.....

Best of luck!
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Old 09-04-2020, 06:33 AM   #26
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You want to buy a home in the lakes region, and for under $300k? Is that even possible anymore?

Are you eventually going to sell both places, or are you just looking to sell your NH home and buy another while keeping the Carolina place?

If just selling and buying in NH, I would probably sell now while things are crazy and, next year, find a long-term rental and be able to buy cash. It's a gamble that the market doesn't continue to increase, but I just simply don't see how it can. Something's gotta give.

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Old 09-04-2020, 06:57 AM   #27
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Thanks for your feedback to all, great info !

I like idea of home equity loan approach, low cost interest rates, and low Closing costs, sometimes you can find 'no' closing costs.

The other option mentioned, selling now to get the highest price, and live in a rental until I 'Close' on new house purchase. I have a condo down in S.C, and could live there, until new home purchase, but buying new house from a distance or sight unseen is a challenge ! I know folks who have done this, but can also have negative results.

The one main issue I see, is housing inventory. I'm looking to purchase a home for under $300k, that's my challenge. When houses in this price-range come on the market, they seem to be going under contract within days !
We had the same issue trying to find a small, affordable home in NH in general and one that didn't involve renovation. We were just very lucky to find new construction in the Weirs and all in ended up paying $274,000 (base was $249,000).

Yes- it was very difficult trying to get the house built from living 6 hours away, but we actually did do it long distance, so it is doable, especially with everything being able to do on line.

It's not on the water, of course, but close enough to enjoy it as we don't have a boat anyway. It is not the perfect house we were seeking, nor in no way the exactly perfect area we wanted to be in, but it did check off a lot of the boxes we had.

Our goal was that was the house we bought had to come in UNDER what we got from the proceeds of the sale of our other home, INCLUDING all the moving expenses for BOTH moves, atty fees and closing costs involved with BOTH homes, the extra money we had to pay towards the temporary rental, and the money we still wanted/needed to put into the new house AFTER we moved into it- things like a radon mitigation system, a standby generator, light and ceiling fan fixtures, window treatments, etc. etc. That is what would make moving worth it.

Happy to say we pulled it off with $3000 to spare, which will be used next year to do some work in the basement and some other incidental things. (and no, we are not finishing off the huge walkout basement . That would go against our plan for a simple, easy lifestyle with low expenses. We'll leave that to the next owners or our son when he inherits it.)

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Old 09-04-2020, 08:08 AM   #28
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Buying a home in the lakes region for under $300,000 will be challenging. I've seen a few nice places in the mid 3's but nothing under 3 that doesn't need a ton of work, JMO.
Things may change but no one knows what the prices will be in the future. The only thing we know right now is it's a good time to sell.
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Old 09-04-2020, 10:56 AM   #29
mswlogo
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Originally Posted by DesertDweller View Post
Woody38, I can assure you that sellers do care (or at least very much should care) whether the deal is a cash deal or subject to financing. Having been on the seller side of a house sale that fell through due to the buyer's not getting financing and having seen it with others it really does matter. The buyer having mortgage pre approval is nice but having them with funds on hand is nicer. If nothing else, the transaction can close significantly faster.
It depends a lot on how much they are putting down. Often one way financing fails is due to appraisal coming in a lot lower than the purchase price. Especially these days. Pre approval with a large down payment is pretty close to cash.

Also just because someone does offer "cash" it doesn't mean they don't plan to borrow money. They are just willing to not put bank approval as a contingency.

Nothing is a guarantee until closing.

Also as far as equity loan goes. Payments on equity loans even for a modest $300k can be huge. Especially for someone retired on social security.

Oh when I did my last equity loan (not long ago) they wanted my last two pay stubs.

BTW it's always a good idea to have an outstanding Equality loan (with nothing borrowed against it, it cost nothing to have it). I've written large checks from it and then just pay it right back in full.
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Old 09-04-2020, 12:27 PM   #30
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Default Been there, done that

3 Years ago we decided to make the move to this area. We sold our house in MA easily, and worked with the buyer to push out the closing an additional month. Meanwhile we were house shopping in the area, and frustratingly we could not find what we wanted for some time. We arranged the contingency of a winter rental property in the event we could not find something. Ultimately we found our dream home in West Alton, closed on both properties the same day. Nerve wracking, but it is do-able!
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Old 09-18-2020, 09:04 AM   #31
Susie Cougar
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Originally Posted by bigdog View Post
I am in the process to sell my homes and down-size, and purchase a smaller residence. My dilemma is that I am ‘house rich and cash poor’.

Before I can buy purchase another home, I must sell my current home first. I was caught in this same senario several years ago, and took out a mortgage to buy my current home, before selling my house at the time, but was able to sell my other house about 5 months later. That scenario cost me several thousand dollars to get that mortgage, Closing costs, etc. When the house sold, I was able to pay-off that mortgage in cash.

I know my current house would sell quickly, but in the current housing market, I don’t think if I find another house to buy, that the seller would agree to a contingent clause in the contract, to wait until I sell my current house, not going to happen !

I cannot get another mortgage to buy my new home, as before, I am now retired, and no longer working, nor have the income I had when working.

Appreciate your thoughts, and ideas on how to move forward, with new home purchase.

Thanks !
Any updates? Do you have your home on the market yet? Make sure you post a listing here for the for a members to see when you do decide to sell.
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