You just found your dream home in Baltimore, MD and you need to sell your house fast. You would like to place a firm offer on this home, but cannot risk carrying two mortgages at the same time. There is a chance that someone else will love this home and make an offer. How can you sell your house fast in Baltimore, MD and firm up an offer for your dream home?
There are solutions! A professional home buying company can help you sell your home quickly. Once you have a firm offer, you can place a firm offer on this dream home that your family would love to live in. We hope to be able to help you purchase this home if your current home has not sold yet in MD.
We can help you navigate the mortgage rules and regulations that the FHA, Fannie Mae, or Freddie Mac all have to follow when applicants apply for a first or second mortgage on their existing home. In this post we will discuss some of the methods to use to meet these requirements and pave the way to moving into your new home.
Moving to Your Dream Home when your Existing Home has not Sold
Qualify for a Second Mortgage
The FHA requires applicants to meet certain qualifications. Why are you moving now? Are you moving because of job requirements, your family needs more space or perhaps separation from your spouse? Is your current mortgage less than 75% of the value of your existing home? If not, getting a second mortgage approved may be difficult.
Can family members help you out with purchasing another home before your existing home is sold? You normally must agree to repay them when your current home sells. Make sure that there is a clear understanding and terms that will be adhered to. Many family relationships are ruined because the terms were not clear, well understood or adhered to when money is borrowed from family members.
Bridge loans are often used to carry both homes until the current home sells. In Baltimore MD, they are sometimes called a “wrap loan”. Consumers using a bridge loan need to make sure they can handle two mortgage payments until your current home sells. Bridge loans are considered short term loans and should be considered to last no longer than one year.
Credit Ratings and Lender Requirements
Check with several lenders to verify their requirements. Most want their clients to have a very good credit rating. They typically will not finance more than 80% of the value of both homes. They also will want verification of income levels to ensure that you can meet the monthly payments.
Consider Using a 401K
In some situations, it might make sense to borrow from your 401k to finance your dream home until your current home sells. There can be tax issues that you will need to deal with and you must pay yourself back when your current home sells. Remember that you will be forgoing interest and dividend income in your 401K during the time you borrow this money. This can have long term impacts on your retirement depending on how long it takes to sell your home.
Rent Your New Home
The seller may be interested in renting the home from you for a few months until your home in Baltimore sells. They also need to find a home to move to and may appreciate the idea of renting the home from you while they search for a home. The rent you collect will help with the bridge loan payments until you sell your home.
Plan for Contingencies
You can also make an offer contingent on your home selling. There is a risk that someone can come along with a firm offer, which will place pressure on you to either firm up the offer or let it go. Consumers carrying two homes should also plan on carrying both homes longer than planned just in case your home does not sell. Access to savings, 401K, bridge loans etc. should all be part of this contingency plan.
These are all possible options to consider when buying a new home and selling your current home. A professional home buying company can help you with all of these options.