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Message
Mortgage Question - if unable to sell home
Posted on 4/20/20 at 6:46 pm
Posted on 4/20/20 at 6:46 pm
I am about to put my house on the market in a couple of weeks. Obviously I'm nervous about selling with all the financial issues in the world today. I am hoping opening the economy back up will help, but am wondering what my options are if I don't sell before my new house is finished.
For example, let's say my new home is costing me $400k to build, and my current home should sell for about $300k. I do not have a mortgage on it today.
Would I have to get a 400k mortgage, and therefore have payments based upon a $400k note, and make a $300k payment, but continue to pay the mortgage as if it's a $400k mortgage after?
Will I have options if I can't sell before I have to close on my new home?
For example, let's say my new home is costing me $400k to build, and my current home should sell for about $300k. I do not have a mortgage on it today.
Would I have to get a 400k mortgage, and therefore have payments based upon a $400k note, and make a $300k payment, but continue to pay the mortgage as if it's a $400k mortgage after?
Will I have options if I can't sell before I have to close on my new home?
6
Posted on 4/20/20 at 6:49 pm to kywildcatfanone
I never ended up needing to do it, but I had a similar issue waiting on some money from my previous home before our renovations were due on new home. I was told I could do a “recast” at some point which would allow me to be able to put the extra money into the loan and would adjust my note accordingly. Other option would be having to refinance but that would obviously be extra fees.
Posted on 4/20/20 at 8:31 pm to kywildcatfanone
quote:
For example, let's say my new home is costing me $400k to build, and my current home should sell for about $300k. I do not have a mortgage on it today.
Would I have to get a 400k mortgage, and therefore have payments based upon a $400k note, and make a $300k payment, but continue to pay the mortgage as if it's a $400k mortgage after?
Not really understanding but are you paying cash to build your new home? The 400k?
You dont owe anything on your current home and selling that for 300k?
Are you needing money from that sale?
Are you using a construction loan for the new house build?
Need some clarification
Posted on 4/20/20 at 8:33 pm to kywildcatfanone
just get a bridge loan on the new construction until you sell your current home
Posted on 4/20/20 at 8:38 pm to kywildcatfanone
No, just do a recast after your home sells. Rate and term stay the same but principal and interest portion of note is lowered. Costs about $200 or so.
Posted on 4/21/20 at 6:01 am to SDVTiger
quote:No
Not really understanding but are you paying cash to build your new home? The 400k?
quote:Yes
You dont owe anything on your current home and selling that for 300k?
quote:Yes, was to be my down payment
Are you needing money from that sale?
quote:Builder has the construction loan
Are you using a construction loan for the new house build?
Posted on 4/21/20 at 6:02 am to npt817
quote:
No, just do a recast after your home sells. Rate and term stay the same but principal and interest portion of note is lowered. Costs about $200 or so.
This is what I was wondering. I've never heard of a recast, is that standard mortgage language, or do you have to request it be included?
quote:Other thing I was wondering about. If I do some kind of bridge loan, I'm essentially doing multiple closings with fees, correct? Trying to avoid that as well.
Costs about $200 or so.
Posted on 4/21/20 at 6:38 am to kywildcatfanone
I’ve done a bridge loan and it was basically like when you get a Heloc. You just sign a couple papers with your banker and it’s very cheap. Like a few hundred bucks, maybe $200. It’s not like doing a full mortgage closing.
Posted on 4/21/20 at 7:08 am to mtcheral
Ah, okay. Good deal 
Posted on 4/21/20 at 8:39 am to mtcheral
quote:
I never ended up needing to do it, but I had a similar issue waiting on some money from my previous home before our renovations were due on new home. I was told I could do a “recast” at some point which would allow me to be able to put the extra money into the loan and would adjust my note accordingly. Other option would be having to refinance but that would obviously be extra fees.
Recast is a great option to have on a mortgage. I personally refuse to have a mortgage without that option.
Unfortunately you will find out that many mortgage lenders do not offer that option anymore. It was very common at least through the 1980s. Now days it seems about 50% of them still offer it.
Posted on 4/21/20 at 8:41 am to kywildcatfanone
have you verified your lender will give you $400k loan for a $400k new house? I have to think you need some small amount of cash down at a minimum.
Posted on 4/21/20 at 8:42 am to kywildcatfanone
quote:
This is what I was wondering. I've never heard of a recast, is that standard mortgage language, or do you have to request it be included?
It can also be referred to as re-amortization. Some lenders will charge small fees, some will not. Some will only allow recasting after a minimum size lump sum extra principle payment but you should have no issues with that requirement for your situation.
Posted on 4/21/20 at 9:22 am to kywildcatfanone
quote:
I’ve done a bridge loan and it was basically like when you get a Heloc. You just sign a couple papers with your banker and it’s very cheap. Like a few hundred bucks, maybe $200. It’s not like doing a full mortgage closing.
No loans recast anymore
Bridge loans are not cheap lol rates will be 10% range cost you 2-4pts
If your home doesnt sell then just use an FHA loan and put 12k down if you structure it like a purchase on that construction loan
Keep the rest of the money from your sale in your pocket in case the world melts down even more
Payment on 400k loan with FHA even with MI is 1900 + taxes insurance
Posted on 4/21/20 at 10:13 am to kywildcatfanone
Do a HELOC (using as a bridge) of around 90% on your current home (270k) put that down on new home then have a $130k mortgage on new home.
HELOCs like this can be done for no closing costs (may have to pay back appraisal fee ~$400 when paid off) and as low as 2.99% for 12 months with only interest payments required
HELOCs like this can be done for no closing costs (may have to pay back appraisal fee ~$400 when paid off) and as low as 2.99% for 12 months with only interest payments required
This post was edited on 4/21/20 at 10:15 am
Posted on 4/21/20 at 1:15 pm to notsince98
quote:
have you verified your lender will give you $400k loan for a $400k new house? I have to think you need some small amount of cash down at a minimum.
No, but that figure doesn't include the lot which I own and if I have to, I will put down money, then pay myself back when my current home sells if I have to.
Posted on 4/21/20 at 1:30 pm to kywildcatfanone
I would go the recast route if possible. I had a similar situation about 18 months ago and recast was an option, but it never got to that point. Check with your lender.
Posted on 4/21/20 at 1:45 pm to SDVTiger
quote:
Bridge loans are not cheap lol rates will be 10% range cost you 2-4pts
I was talking about the upfront fees. Of course there is interest but the premise is that this is not a long term situation anyway.
Posted on 4/21/20 at 4:54 pm to mtcheral
Bridge Loan is easiest thing. I am in the business and talk to realtors daily and the inventory is so low right now if you have a decent house you should be able to sell it within 30 days so long as you don't have a greedy realtor who has is priced too high.
Posted on 4/21/20 at 4:57 pm to Thomas98
quote:
Bridge Loan is easiest thing. I am in the business and talk to realtors daily and the inventory is so low right now if you have a decent house you should be able to sell it within 30 days so long as you don't have a greedy realtor who has is priced too high.
Even in this climate? I am hoping that with things opening up in May and putting my house on the market at that time, might get me a lot of interest for people who want to move during the summer before school starts back.
I am planning to sell by owner, or at least start trying to sell myself, starting with zillow.
I am not planning to overprice. Just put a new roof on and am not planning to adjust my price as a result, but I will be a bit more resistant to dropping far off my asking as a result. I guess I will play it by ear.
Posted on 4/22/20 at 9:47 am to kywildcatfanone
HELOC/Bridge is best option. Bank I am with has 0 fees and the 2.99% for 12 months, makes it easy. I have actually used this 2 times already and it worked out great. Never had a concern selling the old house within the 12 months
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