So you’ve found your dream home. There’s just one problem: Your house has not sold yet! So what do you do? In this article, we hope to help you figure out how to make the move happen. Moving can be tough when you are trying to buy and sell a home all at once. The FHA, Fanny Mae, and Freddie Mac all have rules about getting a second mortgage while you still own your home. If you want to secure an additional mortgage, you will have to clear a few hurdles. So, let’s solve the problem if your house has not sold yet.
First off, to qualify for a second mortgage through the FHA, you must meet certain qualifications.
You need to have a good reason for needing to move right away, and not after your current house has sold. For example, moving because your family needs a larger space, you are separating from your spouse or for work purposes. This is just something else to consider if your house has not sold yet.
Also, you cannot owe more than 75% of the value of the first home. There are additional restrictions as well, do your homework before assuming you will qualify for an additional loan through the FHA.
Asking family can be another route, so long as you put everything in writing.
Agree to pay them back in full upon the sale of your first house. Whenever you borrow money from family, you want clear terms to be set and adhered to.
If you think a family relationship could be damaged because of money, you might want to look for a different way to secure the financing you need.
A bridge loan or as it’s sometimes called, a “wrap” loan can help bridge the gap while you attempt to cover two house payments.
Another thing to be aware of if your house has not sold. These types of loans will take both mortgage payments, and combine them into one interest-only payment. These are typically short-term loans, lasting 6 months to one year.
Lenders have different requirements, but you must typically have great credit and be financing less than 80% of the value of both houses.
While it may not be your first choice, you can talk to your boss or plan administrator about borrowing from your 401k.
Make sure you understand how the tax penalties will work, and pay yourself back after the sale of the original home. This may not be an option for everyone, but definitely, something to look into.
Try to offer the seller of the second home, the option to rent it back from you for a few months.
Depending on their situation, they might love the idea of being able to stay in their home while they shop for a new one. If you are attempting to carry two mortgages, this is a great way to alleviate the cost. This is just another idea to think about if your house has not sold.
Add in a contingency in your offer allowing you to close on the new home, only after your home has sold.
If your home is new to the market and priced well, it should sell right away. Present this to the owners of the second home, along with your offer. Ensure them that the closing won’t be delayed and that you agree to close in a certain amount of time