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re: Home buying question re: source of cash to close
Posted on 1/5/24 at 12:31 pm to PhiTiger1764
Posted on 1/5/24 at 12:31 pm to PhiTiger1764
quote:
I used my HELOC.
This is a great option OP. If you are selling it within a year, you may be able to find a HELOC with limited payments or interest only for 12 months or more. The DTI generally only considers your monthly payments, so if its interest only it would be a very small monthly payment. I do also believe there is the option of listing any debts that will be paid off once you sell your old home, so that may help you also.
I'm assuming you found a new property? Your 3rd option is that you could offer to buy the new home with the contingency of selling your old home first. Given, I wouldn't suggest this as its a major flag. But you never know. Another possibility is to offer to "rent" the new home until you sell your old home and then close on the mortgage. The latter two are much better in a buyer's market but you may be in one, idk.
1
Posted on 1/5/24 at 12:40 pm to baldona
quote:
Your 3rd option is that you could offer to buy the new home with the contingency of selling your old home first.
Yea that would be nice, but isn't going to fly. Basically, at the price I'm negotiating, a quick close that I can reasonably assure them WILL happen is going to be a requirement from seller.
I think I have it mostly worked out.
Cash on hand represents about 30% of the required funds, then I can get about 50% of the required funds from 401k loans and finally I can cover the remaining 20% or so from taxable brokerage account while not incurring any short term CG.
I spoke with lenders and their suggested route was bridge loan, but the fees for such are similar if not greater than my estimated tax liability for sale of long term holdings.
Even without current home sale, I will be able to repay all 401k loans within 30 or so days so only minimal risk there.
This post was edited on 1/5/24 at 12:42 pm
Posted on 1/5/24 at 1:00 pm to JohnnyKilroy
Just to make things more complicated, any chance of doing a combo loan on the purchase?
80 or 75% first mortgage with a purchase money HELOC behind it?
No PMI issue. The 75% first could improve the rate scenario to the point equal to the full down-payment after the sale of your home. And you would already have your next HELOC available (after you pay it down with the sale of your home).
80 or 75% first mortgage with a purchase money HELOC behind it?
No PMI issue. The 75% first could improve the rate scenario to the point equal to the full down-payment after the sale of your home. And you would already have your next HELOC available (after you pay it down with the sale of your home).
Posted on 1/5/24 at 1:06 pm to JohnnyKilroy
Just do a bridge loan
You will have to source all the accounts if you are drawing from them all
You will have to source all the accounts if you are drawing from them all
Posted on 1/5/24 at 1:31 pm to SDVTiger
Fees I’m getting quoted for bridge loan would be similar or higher than what I’m estimating my ltcg liability to be.
Not trying to be shady with lender or obfuscate source of funds. Just a question of damage limitation on taxes and expenses. Really just trying to see if there are options I wasn’t aware of. I could cover it all with brokerage account funds but that seems like one of the least efficient methods so seeing if there was something out there I didn’t know about.
Not trying to be shady with lender or obfuscate source of funds. Just a question of damage limitation on taxes and expenses. Really just trying to see if there are options I wasn’t aware of. I could cover it all with brokerage account funds but that seems like one of the least efficient methods so seeing if there was something out there I didn’t know about.
This post was edited on 1/5/24 at 1:41 pm
Posted on 1/5/24 at 1:36 pm to meansonny
quote:
Just to make things more complicated, any chance of doing a combo loan on the purchase? 80 or 75% first mortgage with a purchase money HELOC behind it? No PMI issue. The 75% first could improve the rate scenario to the point equal to the full down-payment after the sale of your home. And you would already have your next HELOC available (after you pay it down with the sale of your home).
I like this. Lender I talked to didn’t mention but I’ll inquire.
Posted on 1/5/24 at 2:02 pm to meansonny
quote:
Just to make things more complicated, any chance of doing a combo loan on the purchase?
80 or 75% first mortgage with a purchase money HELOC behind it?
No PMI issue. The 75% first could improve the rate scenario to the point equal to the full down-payment after the sale of your home. And you would already have your next HELOC available (after you pay it down with the sale of your home).
How does this work? Can you do this from any property?
Posted on 1/5/24 at 6:27 pm to baldona
Helocs are generally owner occupied.
And they are generally from banks (or credit unions).
The good news (at least in GA) is that they are typically $0 closing costs.
The rates are probably steep right now (tied on top of prime or a treasury or LIBOR). But you only pay interest on what you owe (i.e. pay it off quickly and use again when needed).
And they are generally from banks (or credit unions).
The good news (at least in GA) is that they are typically $0 closing costs.
The rates are probably steep right now (tied on top of prime or a treasury or LIBOR). But you only pay interest on what you owe (i.e. pay it off quickly and use again when needed).
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