Posted on: 13th Jul, 2010 08:56 am
Currently we own two houses. We have paid our mortgage in full on the first house, which is currently being rented. It has an estimated value of $150K. Our current home is worth about $175-200K and has a mortgage of $125K.
We would like move and sell the house that has the mortgage. The properties we are interested in buying are $350-450K. We have income of $150K and credit scores around 780-800. Unfortunately, we are low on cash for a 20% (by about $25K) downpayment and don't have quite that much equity in the property we will be selling. Due to health and personal reasons, we need to move before next Spring, which gives us about 9 months, and we would like to be moved out of the house before it is put on the market for sale.
I see lots of information about low downpayment loans for 1st time home buyers, which we are obviously not. I also find information about HELOC & home equity loans. I don't understand how this relates to our situation as we would be using equity in a home that no longer has a primary mortgage.
We are also considering renting an apartment while we save at a rate of around $2K/month. It would only take us about a year, but I'm also worried about the multiple hard inquiries that would go against our credit ratings if we did this. Also, it would be expensive to move twice.
Any advice or suggestions would be most appreciated.
We would like move and sell the house that has the mortgage. The properties we are interested in buying are $350-450K. We have income of $150K and credit scores around 780-800. Unfortunately, we are low on cash for a 20% (by about $25K) downpayment and don't have quite that much equity in the property we will be selling. Due to health and personal reasons, we need to move before next Spring, which gives us about 9 months, and we would like to be moved out of the house before it is put on the market for sale.
I see lots of information about low downpayment loans for 1st time home buyers, which we are obviously not. I also find information about HELOC & home equity loans. I don't understand how this relates to our situation as we would be using equity in a home that no longer has a primary mortgage.
We are also considering renting an apartment while we save at a rate of around $2K/month. It would only take us about a year, but I'm also worried about the multiple hard inquiries that would go against our credit ratings if we did this. Also, it would be expensive to move twice.
Any advice or suggestions would be most appreciated.
Last, first - what are the "multiple hard inquiries" that you speak of? Are you thinking that landlords would hamper your credit if you should rent?
As for the home equity situation...that's a possible way for you to cash out on the home you own free and clear, and use the funds for the down payment on the new proposed purchase. You'd be wise to check this out with a lender or two. That's the way I see it as relating to your situation.
You're right in that you won't be first-time buyers, of course. That might not prevent you from obtaining a low down payment loan, though. Check with your favorite lenders (or find a new favorite if you don't have one) and see precisely what you're offered. Things are not always as they seem, and there may just be light at the end of this tunnel.
As for the home equity situation...that's a possible way for you to cash out on the home you own free and clear, and use the funds for the down payment on the new proposed purchase. You'd be wise to check this out with a lender or two. That's the way I see it as relating to your situation.
You're right in that you won't be first-time buyers, of course. That might not prevent you from obtaining a low down payment loan, though. Check with your favorite lenders (or find a new favorite if you don't have one) and see precisely what you're offered. Things are not always as they seem, and there may just be light at the end of this tunnel.
Thanks for the quick reply.
The hard inquiries to which I refer are the credit reports that lower your FICO by 0-5 points and remain on your credit history for 1-2 years. Worst case scenario would involve about a 30 point drop for 2 years due to the inquiries made by the landlord and several utility companies. My concern is that this would either raise our interest rate on a new mortgage or else we would be in the apartment for an additional year waiting for our credit score to rise.
I'm guessing our next step is to actually talk to a lender about what is available. I really appreciate the information you gave.
The hard inquiries to which I refer are the credit reports that lower your FICO by 0-5 points and remain on your credit history for 1-2 years. Worst case scenario would involve about a 30 point drop for 2 years due to the inquiries made by the landlord and several utility companies. My concern is that this would either raise our interest rate on a new mortgage or else we would be in the apartment for an additional year waiting for our credit score to rise.
I'm guessing our next step is to actually talk to a lender about what is available. I really appreciate the information you gave.
A credit hit of as little as 5 points isn't something to be alarmed about, generally. Of course, if your scores are challenged already, then you've got to think of those things. I don't see utilities running credit reports on a regular basis, so that ought not to be a concern at all.
"Next step: lender" makes a great deal of sense to me. You'll be able to determine where you stand insofar as the scores are concerned, as well as learn what your mortgage options would be, and how you can improve your odds.
"Next step: lender" makes a great deal of sense to me. You'll be able to determine where you stand insofar as the scores are concerned, as well as learn what your mortgage options would be, and how you can improve your odds.