How do you refinance your house to pay for the down payment on another prior to selling the one you're in?

Question

Our house has increased in value almost 75%, and we would like to use that equity for a down payment on another house. Our current house has not sold, and we are under contract to close one month from now, not giving us much time. We don't want to lose this house we have found. What are our options?

Our current house appraised at $415K, original sale price was $252K. The purchase price of the new house is $465K, with about 94K down to avoid mortgage insurance.
As far as a bridge loan is concerned, I believe that our current house has to be under contract before we qualify. Is that correct?

Answer 1

Since your not giving numbers to work with..it's a little hard to figure without knowing the value of your current house, the amount needed for a downpayment, how much equity you have in your current home, etc.
Here's a kind of perfect world situation......
Anyway...lets say you have a house worth 300K..and you owe 50K on it. The house your looking to buy is 225,000. You should be able to get a quick and painless equity line on the first home for up to about 100K or so without doing all sorts of dancing. Less than that in a heartbeat.Then..if you plopped 10% + of your new homes value down as a down payment , lets say you popped down 30K..you could get a no-doc 1st mortgage on the new home. This is a mortgage where you don't have to prove much more than your identity at closing. It's sweet! It speeds up the process DRAMATICALLY.

Answer 2

JB you have some great answers already but if I may let me add a little insight as well. I like the idea of a bridge loan but here is the problem. It takes awhile to jump through the hoops as the guidelines are very strict on bridge loans. I recommend refinancing the current home to pull out the cash needed and I recommend refinancing into an option arm as you can elect to take the "teaser rate" while the home is for sale. The advantage of that is simply having a much smaller monthly payment so you can afford to make both mortgage payments until the old home sells. Make sure that the option arm does not have a prepayment penalty and that should solve everything. I would also start the process today as it may take 2-3 weeks to complete the refinance process. JB I hope this helps you but if you have any further questions or concerns please don't hesitate to email me [e-mail].

Answer 3

You want a bridge loan. The interest rate is a bit higher than market, but you don't have to make any payments, typically for at least 6 months and then usually can go interest only for another 6.

Then use the proceeds from the bridge loan to take care of the down payment and closing costs on your new place. When the old one sells, the bridge loan will be paid off through the escrow agent and you'll get a check for any remainder.

When you apply for the loan for your new place, tell the lender that you need a bridge loan until you old place sells. They may even ask you about this before you get a chance to bring it up.

Answer 4

if you are located in California maybe i can help you. i work in transpacific company and we offer refinancing with a 1% interest rate that is $1,608 a month and that is fixed for 5 years. But that would depend upon your FICO score or your credit score, usually if your FICO is 660 above, 100% you'll get the 1% interest rate. What happens after 5 years? You'll have the Adjustable Rate Mortgage which depends upon a particular economic index. Or if not, we can offer you a 100% financing. We will going to finance everything if you want to invest on a new house. If your interested just give your home # we'll talk over the phone and if everything will gonna be okay then i can set an appointment with you with one of our loan officer. We do home visit to talk with you personally and its an obligation-free service. Our processing takes atleast 15-30 days. By the way this is Cliff if you have some questions pls call me anytime between 1pm up to 9pm. Best regards and i hope you consider my offer.

Answer 5

Hello,

I would suggest that you do a cash out refinance on the property your currently in, so you can pull out enough equity for your down payment...

The bridge loan is a good thought, but for one it is very strict and particular in their qualification guidelines, and as the last response said, it is a much higher interest rate...

Roughly how much money do you need fro the down payment on the new house? 10%, 20%?

With a cash out, option arm program, you actually can get a payment that obligates you less then interest... (called a minimum payment, if you were to only make this payment it would have negative amortization)

It basically gives you the flexibility of not having such a high obligated payment on the house while you wait for it to sell...

just to elaborate if you have a loan with a $2000 monthly payment, the interest only payment would be $1870, and the MINIMUM PAYMENT OPTION would only be $1,100...

As you can see it obligates you much less then even the interest that is due each month..(so that you dont have to spend much money while waiting for the sale)

Then, after the refinance closes, you have the funds to put the down payment on your home...

Now you said you are under contract to close on the purchase in a month... I would advise you to get started on this VERY quickly...you dont have much time...

One thing i can add is that if you were to do the refinance on your current house with my company, the purchase loan would have NO CLOSING COSTS from my company (most lender fee's can range from $2,000-6,000)... We offer that program for all repeat customers...

My name is Jason Fry, i work with Providential Bancorp, a antionwid mortgage lender. Feel free to give me a call, and i can give you a detailed analisys so that you know all of the figures you qualify for.. From there, you decide if it makes sense for you..

You can reach me directly at 312-264-6448, or email me at [e-mail]..Or call toll free at 888-264-SAVE (7283)...

Thanks, and good luck!

Jason Fry
senior mortgage specialist
Providential Bancorp
312-264-6448

Answer 6

£3,000 for a (so-said as 3 mattress roomed) homestead. The 0.33 mattress room merely in good structure a toddler's cot and the toy container. interest price in 1970 develop into 15% after we agreed the deal yet develop into 15.5% with suggestions from the time the second one instalment develop into due and went as a lot as 17% a touch later. Our funds were £19 in keeping with month initially yet we had to characteristic to that each and each and every time there develop into an interest develop. That develop into rather a daunting time and we somewhat struggled. With a touch one and a clean born toddler there develop into no way i ought to earn any money for rather a at the same time as. baby care, like many mums can use now, did not exist. In lately lets pay better some months (as an social gathering if my husband had done previous everyday time) and we did that when it develop into conceivable. because the years went with suggestions from and £19 develop into no longer this kind of massive area of the money coming in, we better our funds many times and this took countless years of the era of the private loan. in case you do this those days there's a huge penalty to pay for clearing the private loan early.