How do I buy a Denver home without selling mine first?
It's a very common question that I get and I certainly don't blame people for asking. With inventory so slim right now, there is always the risk that if you sell your home before finding another, you might not find the right home in time and then have to find a rental to bridge the gap. So in an ideal world, if you can buy your new home, and then sell your current home after you move, why wouldn't you?
Just like most aspects of buying a home, it all depends on financing and if you can qualify for two mortgages at the same time. To get the best answers, I turned to one of my favorite lenders, Tracey McVicker with SWBC Mortgage.
He offered a number of options to make this work:
1. If you have the ability, you can qualify for two mortgages at the same time and can buy right away. The big question here is if your debt to income ratio will be low enough to qualify. If so, you are golden. Many buyers are concerned about mortgage insurance if they can't put enough money down. In this situation, you could do a lower down payment loan and when your home sells, pay your mortgage off to the amount required to eliminate mortgage insurance.
If you need the money from the sale of your home to buy the next home, there are a couple of options.
2.Borrow from retirement. Most IRA's allow you to borrow funds for up to 90 days with no penalties. So a lot of buyers will borrow from their IRA and when their home closes, they put the money back in with no penalties.
3.Cash out Refinance. You could do a cash out refinance of your home where you refinance yourhome and use the equity built up to get cash back at closing which can then be used for your downpayment. Keep in mind that doing this will increase your monthly payment and may make qualifying for two mortgages more difficult. You will net less when you sell your home but will get to access the equity up front.
4.Home equity line of credit. Another option is to get a home equity loan to access the equity in your home. This can get tricky and you typically can only access up to 80% of the homes value. And again, this equity loan will increase your monthly payment so that gets factored in too.
5. Gift funds. You are allowed to receive gift funds from a relative for the down payment on your new home. You could receive these funds if you have a generous relative and once your home closes, pay them back.
If none of these are an option for you, don't worry, we have plenty of strategies that we can use to make selling and buying more tolerable and realistic. If you would like to talk more about these options, please contact myself or Tracey and we can walk through it with you.
Tracey McVicker
Senior Mortgage Consultant
SWBC Mortgage Company
400 Inverness Parkway, #160
Englewood, CO 80112
303-405-6400, Office
720-480-3737, Mobile
877-789-4499, Efax
www.tmcvloans.com
tmcVicker@swbc.com
LMB # 100023964 / NMLS # 257339
Mic Ortega
Live Urban Real Estate
303-903-3734
Mic@Liveurbandenver.com
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