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Buying New Home Before Selling Old Home; Considerations

We frequently have borrowers come to us who want to buy a new home before selling their current home, so they are not left homeless.

Here are the considerations and options (we address this often b/c it comes up so frequently).

1. Debt Ratios: Borrowers will need enough income to qualify for both the new mortgage and current mortgage. One solution is to rent out the current residence.

2. Down Payment Funds. Borrowers often lack sufficient down payment funds to buy a new home without accessing equity from their current home. Solutions:

A. Borrowers can put minimal down on the new purchase (3.5% FHA; or 10% down if price is under $1.1mm), and then refinance into a smaller mortgage after they sell their current home.

B. Borrowers can get an equity line against their current home before buying a new home in order to access equity.

C. Borrowers can get a bridge loan to access equity as well, but bridge loans are more expensive and they require more equity than “equity lines.”

Jay Voorhees
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646