You are relocating for a job and you have to find a new place for your family. Possibly your spouse and kids can go ahead of you. You found the home of your dreams and don’t want it to be sold out from under you before you’ve sold your current home.
These are all common scenarios homeowners face when they are looking to buy a new home while still carrying a mortgage on their current residence. Yes, it is possible to qualify for financing while you are still paying your current mortgage. If you qualify for both mortgages we can help you can do a Recast so you can buy that home before it's gone. Or you can even put a “contingent” offer in on a new home, meaning the purchase is “contingent” upon the sale of your current home.
You do have other options.
Buy-Low, Sell-High – the housing market is seasonal. When you buy your new home in the off season (fall and winter) and sell you current property when the market is busy (spring and summer) you have the opportunity to save on costs. If you are financially capable of carrying two mortgages for three-to-six months this is a great alternative.
Rent Back – if you get an offer on your current home before you settle on your new home, sometimes you have the opportunity to “rent-back.” In this arrangement, the seller can continue living in their current residence and pay the new owner a monthly rent equivalent to the new mortgage payment.
HELOC – in this scenario, you can use your existing home as collateral to take out a “home equity line of credit” to use as the down payment on your new home. Once you sell your current home, you can pay off the mortgage and the equity loan. This option works best in a fast-appreciating market and can be a little risky, since it takes a few weeks to get the typical equity loan.
Recast – With a recast you must be able to put a small down payment and qualify for both mortgages. It's also best if your current home is listed and in an active contract with a buyer. The way the recast works is after you sell your current home, you take the proceeds and pay it down towards the mortgage you just took out and the lender re-amortizes the loan. The rate and terms remain the same and you do not incur the cost of refinancing.
In real life, buying and selling schedules may not always coincide. These are some options if you need to carry both mortgages simultaneously. If you have any questions about your specific situation, please let me know!
