I have bought and sold two houses (primary residences) in the past three years. All in seller's markets. When you buy, in a seller's market you need to be under contract for the house you're selling. You don't need to have closed yet. Then, you can start looking for houses in the new market (or just a new house in the same market). Then you don't have to worry about opening a new bridge or home equity loan. If your selling market is hot (most are right now), then why bother with all the hassle of an extra loan just so you can go shopping a few weeks sooner?
Bridge Loan - Mortgage Loan Need Advice
- Thread starter Dwight_Frye
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AZjeff
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Originally Posted by wallyuwl
I have bought and sold two houses (primary residences) in the past three years. All in seller's markets. When you buy, in a seller's market you need to be under contract for the house you're selling. You don't need to have closed yet. Then, you can start looking for houses in the new market (or just a new house in the same market). Then you don't have to worry about opening a new bridge or home equity loan. If your selling market is hot (most are right now), then why bother with all the hassle of an extra loan just so you can go shopping a few weeks sooner?
Sometimes timing doesn't work out perfectly. If your sale falls through and you've signed on a new house then what? If your house is set to close in 30 days and you can't find a property to buy or get outbid then what? Lots of buyers want possession day of closing and aren't interested in renting back to you for a week or month. We didn't want the possibility of having to move everything to storage briefly then into the new house. A bridge or HELOC takes that uncertainty away. This last move it cost us $450 to bridge for about a week and it was worth it.
I have bought and sold two houses (primary residences) in the past three years. All in seller's markets. When you buy, in a seller's market you need to be under contract for the house you're selling. You don't need to have closed yet. Then, you can start looking for houses in the new market (or just a new house in the same market). Then you don't have to worry about opening a new bridge or home equity loan. If your selling market is hot (most are right now), then why bother with all the hassle of an extra loan just so you can go shopping a few weeks sooner?
Sometimes timing doesn't work out perfectly. If your sale falls through and you've signed on a new house then what? If your house is set to close in 30 days and you can't find a property to buy or get outbid then what? Lots of buyers want possession day of closing and aren't interested in renting back to you for a week or month. We didn't want the possibility of having to move everything to storage briefly then into the new house. A bridge or HELOC takes that uncertainty away. This last move it cost us $450 to bridge for about a week and it was worth it.
Dwight,
I was in similar situation early in the year only difference is that I am a few years younger than ya.
No bank will lend you a dime if you don't have a job, that is how they do business.
Well, the good news is that you can use that to your benefit.
Your solution is a HELOC from a local credit union.
Please don't be offended by what I suggest here.
1. Get a job - walmart, lowes, costco, it does not matter, full time, part time, heck get 2, you will need 3 pay stubs, so do this right away.
2. Find out the paperwork they need for the heloc, and apply after you have 2 pay stubs
3. If you have vehicles, heck take out a note against those from same CU or any bank with lowest rate.
4. As soon as you HELOC secured, quit your job.
For the house I would suggest to sell it outright, move to temp housing and put your stuff in storage, 10x20 runs around $100 a month where I am,
Please don't be emotional just run through the obstacles to get to your ultimate goal!
I was in similar situation early in the year only difference is that I am a few years younger than ya.
No bank will lend you a dime if you don't have a job, that is how they do business.
Well, the good news is that you can use that to your benefit.
Your solution is a HELOC from a local credit union.
Please don't be offended by what I suggest here.
1. Get a job - walmart, lowes, costco, it does not matter, full time, part time, heck get 2, you will need 3 pay stubs, so do this right away.
2. Find out the paperwork they need for the heloc, and apply after you have 2 pay stubs
3. If you have vehicles, heck take out a note against those from same CU or any bank with lowest rate.
4. As soon as you HELOC secured, quit your job.
For the house I would suggest to sell it outright, move to temp housing and put your stuff in storage, 10x20 runs around $100 a month where I am,
Please don't be emotional just run through the obstacles to get to your ultimate goal!
Sell current home and stay in a Candlewood Suite type hotel until you find another house.
No way I'd buy a 2nd home while 1st home waiting to be sold.
No way I'd buy a 2nd home while 1st home waiting to be sold.
Thanks to those who offered practical solutions like checking with a credit union. A few points:
- To the person who said I sounded gullible: not hardly. My career consisted of negotiating and reviewing contracts at the municipal, county, state and federal levels among other things so I am quite qualified to review any types of loan agreements.
- The sales market in the community that I wish to buy in is hot. Nice, fairly priced properties often sell within 30 days. The same in my neighborhood. I would only need the money for up to 90 days, and probably much less.
- Rental prices in my area are some of the highest in the country. Like $2500 a month for an apartment that isn't in the ghetto. And i would have to sign a minimum of a 6 month lease. Why would I want to burn cash for many months renting while I am looking to buy ? Right now it only costs me a few hundred dollars a month to stay in my home. Plus the hassle of moving twice.
- The bank where I initially inquired said I would probably need to show income of about $5000 a month to qualify for a HELOC. I'm not going to make that at Walmart and in fact once the unemployment runs out I will probably apply for Social Security which will pretty much cover my monthly expenses if I don't have a house payment. I may only need to pull a few hundred a month out of my assorted retirement accounts.
- I am working with an agent in the area that I want to buy the new home in. I will see if sellers would be amenable to let me rent for 2-3 months while I put my current house on the market. odds are very high that it will sell in just a few weeks and I can then pay cash for the new home
- If I really need to I will tap my retirement accounts. The amount that I will have to pay in taxes will easily be recovered by the appreciation of the real estate within 1 - 2 years which is a heck of a lot more than my accounts are earning.
- To the person who said I sounded gullible: not hardly. My career consisted of negotiating and reviewing contracts at the municipal, county, state and federal levels among other things so I am quite qualified to review any types of loan agreements.
- The sales market in the community that I wish to buy in is hot. Nice, fairly priced properties often sell within 30 days. The same in my neighborhood. I would only need the money for up to 90 days, and probably much less.
- Rental prices in my area are some of the highest in the country. Like $2500 a month for an apartment that isn't in the ghetto. And i would have to sign a minimum of a 6 month lease. Why would I want to burn cash for many months renting while I am looking to buy ? Right now it only costs me a few hundred dollars a month to stay in my home. Plus the hassle of moving twice.
- The bank where I initially inquired said I would probably need to show income of about $5000 a month to qualify for a HELOC. I'm not going to make that at Walmart and in fact once the unemployment runs out I will probably apply for Social Security which will pretty much cover my monthly expenses if I don't have a house payment. I may only need to pull a few hundred a month out of my assorted retirement accounts.
- I am working with an agent in the area that I want to buy the new home in. I will see if sellers would be amenable to let me rent for 2-3 months while I put my current house on the market. odds are very high that it will sell in just a few weeks and I can then pay cash for the new home
- If I really need to I will tap my retirement accounts. The amount that I will have to pay in taxes will easily be recovered by the appreciation of the real estate within 1 - 2 years which is a heck of a lot more than my accounts are earning.
Dwight,
We try to do our best to watch each other's back here, the cumulative knowledge of all the posters will help ya make a decision.
CU - Yes, they will ask for $5k a month but remember, based on your income they have to give you a loan, a lower amount but they have to give you something.
I had to do the same, taking money out of my 401 was an option but the 10% hit was too much, I got a HELOC at 5%.
I say work the system, get the max amount of HELOC you can based on your income,
Walmart was an example, I would find the nearest costco or other industry based on your experience.
You can stay in a long term residential hotel for $70 a night and you can get monthly rates,
Yes, not the best option, but the simplest, but you will have peace of mind of getting out of your house first and then with the cash, you care FREE.
Think outside the box please.
We try to do our best to watch each other's back here, the cumulative knowledge of all the posters will help ya make a decision.
CU - Yes, they will ask for $5k a month but remember, based on your income they have to give you a loan, a lower amount but they have to give you something.
I had to do the same, taking money out of my 401 was an option but the 10% hit was too much, I got a HELOC at 5%.
I say work the system, get the max amount of HELOC you can based on your income,
Walmart was an example, I would find the nearest costco or other industry based on your experience.
You can stay in a long term residential hotel for $70 a night and you can get monthly rates,
Yes, not the best option, but the simplest, but you will have peace of mind of getting out of your house first and then with the cash, you care FREE.
Think outside the box please.
Originally Posted by Dwight_Frye
I am working with an agent in the area that I want to buy the new home in. I will see if sellers would be amenable to let me rent for 2-3 months while I put my current house on the market. odds are very high that it will sell in just a few weeks and I can then pay cash for the new home
I've been a real estate broker for 10+ years, in a hot market, I'd never let a buyer rent the place for a few months before closing. Just a matter of waiting an extra week or two for a better offer and not risk getting stuck with a buyer who might not be able to close and who you might have to evict at some point. Not worth the risk. Never seen it done. Maybe it's possible in other states that are more landlord friendly. Basically a contingency to sell your home costs more. How much more? About 5-10k, at least in my experience because I've put in offers where the sellers had a kick out clause. Basically the buyer once notified had 48 hours to remove their contingency on their offer if there was a competing offer. My offer was 10k less than the other buyer's offer who had to sell their home. So the person who needed to sell their home would have paid an extra 10k, but the certainty to the seller of the home on a buyer who didn't have such a contingency was worth the lower 10k sale price.
As for the Walmart job, depends on the hourly rate. It all goes back to DTI, even at $15 an hour, works out to 30k, no debt and 33% DTI only lets you afford a monthly payment of $825 which isn't a very big loan.
I am working with an agent in the area that I want to buy the new home in. I will see if sellers would be amenable to let me rent for 2-3 months while I put my current house on the market. odds are very high that it will sell in just a few weeks and I can then pay cash for the new home
I've been a real estate broker for 10+ years, in a hot market, I'd never let a buyer rent the place for a few months before closing. Just a matter of waiting an extra week or two for a better offer and not risk getting stuck with a buyer who might not be able to close and who you might have to evict at some point. Not worth the risk. Never seen it done. Maybe it's possible in other states that are more landlord friendly. Basically a contingency to sell your home costs more. How much more? About 5-10k, at least in my experience because I've put in offers where the sellers had a kick out clause. Basically the buyer once notified had 48 hours to remove their contingency on their offer if there was a competing offer. My offer was 10k less than the other buyer's offer who had to sell their home. So the person who needed to sell their home would have paid an extra 10k, but the certainty to the seller of the home on a buyer who didn't have such a contingency was worth the lower 10k sale price.
As for the Walmart job, depends on the hourly rate. It all goes back to DTI, even at $15 an hour, works out to 30k, no debt and 33% DTI only lets you afford a monthly payment of $825 which isn't a very big loan.
I think you will have better luck if you find a mortgage broker online than going into a brick and mortar bank. Basically, since you have asset, you can use HELOC to buy another rental property if you have a competent real estate agent. You may pay more initially but after 6 months you can always refinance.
This should not be a complicated issue, as you are legitimately retiring (working walmart won't do you any good since your pay will be low), and turning into investment. Bridge loan for real estate purchase is usually not as good as a real mortgage for investment property.
Just make sure you tell them you plan to rent it out, and you have enough from your primary home's equity for the rental down payment, and you should be good.
This should not be a complicated issue, as you are legitimately retiring (working walmart won't do you any good since your pay will be low), and turning into investment. Bridge loan for real estate purchase is usually not as good as a real mortgage for investment property.
Just make sure you tell them you plan to rent it out, and you have enough from your primary home's equity for the rental down payment, and you should be good.
Originally Posted by PandaBear
I think you will have better luck if you find a mortgage broker online than going into a brick and mortar bank. Basically, since you have asset, you can use HELOC to buy another rental property if you have a competent real estate agent. You may pay more initially but after 6 months you can always refinance.
This should not be a complicated issue, as you are legitimately retiring (working walmart won't do you any good since your pay will be low), and turning into investment. Bridge loan for real estate purchase is usually not as good as a real mortgage for investment property.
Just make sure you tell them you plan to rent it out, and you have enough from your primary home's equity for the rental down payment, and you should be good.
Have you been reading the thread? You can't get a loan with no income no matter what assets you have. You have no income to pay it back. They always go by DTI. You can't get the HELOC because you have no income to pay back the HELOC. If you already had one, he could have tapped it. Should have gotten one before he got laid off. They eliminated bridge loans when the mortgage markets imploded, you now have to qualify just like a regular mortgage. Planning to rent it out is worthless, you need a signed lease with the rental amount spelled out. Just had 3 closings this month, this is how the mortgages markets are today, not 5-10 years ago.
I think you will have better luck if you find a mortgage broker online than going into a brick and mortar bank. Basically, since you have asset, you can use HELOC to buy another rental property if you have a competent real estate agent. You may pay more initially but after 6 months you can always refinance.
This should not be a complicated issue, as you are legitimately retiring (working walmart won't do you any good since your pay will be low), and turning into investment. Bridge loan for real estate purchase is usually not as good as a real mortgage for investment property.
Just make sure you tell them you plan to rent it out, and you have enough from your primary home's equity for the rental down payment, and you should be good.
Have you been reading the thread? You can't get a loan with no income no matter what assets you have. You have no income to pay it back. They always go by DTI. You can't get the HELOC because you have no income to pay back the HELOC. If you already had one, he could have tapped it. Should have gotten one before he got laid off. They eliminated bridge loans when the mortgage markets imploded, you now have to qualify just like a regular mortgage. Planning to rent it out is worthless, you need a signed lease with the rental amount spelled out. Just had 3 closings this month, this is how the mortgages markets are today, not 5-10 years ago.
So if a person has $401K cash in the bank, they can't get a $500K loan to buy a house ???
Originally Posted by Mr Nice
So if a person has $401K cash in the bank, they can't get a $500K loan to buy a house ???
Right, if they had no income. At least not a conventional loan, I doubt if even a portfolio lender would do it, but probably a hard money lender.
This guy doesn't have cash though. If you had cash, I'd say stick it in a brokerage account and do a margin account which is free and you have an instant line of credit good for half that amount or $200.5k.
So if a person has $401K cash in the bank, they can't get a $500K loan to buy a house ???
Right, if they had no income. At least not a conventional loan, I doubt if even a portfolio lender would do it, but probably a hard money lender.
This guy doesn't have cash though. If you had cash, I'd say stick it in a brokerage account and do a margin account which is free and you have an instant line of credit good for half that amount or $200.5k.
I wrote $1 million cash.....
And stupid cellphone auto spelling wrote $401K
And stupid cellphone auto spelling wrote $401K
Originally Posted by Mr Nice
I wrote $1 million cash.....
And stupid cellphone auto spelling wrote $401K
Yeah I thought that was a weird number to post. Again, it's all pretty standard, just goes to DTI. If you have a preapproval that says you can borrow 200k and you have 200k in the bank, then that means you can buy up to 400k worth of house or thereabouts (not considering reserve requirements which is typically 3-6 months of mortgage payments). If you're approved for 200k and you have 800k, then you could buy 1 million. Having 200k or 800k in the bank doesn't do anything to what you can borrow. That's all controlled by your income. And if you have 0 income and nothing in the bank but have house equity, then you can't borrow anything or buy anything. At least with a conventional loan.
I wrote $1 million cash.....
And stupid cellphone auto spelling wrote $401K
Yeah I thought that was a weird number to post. Again, it's all pretty standard, just goes to DTI. If you have a preapproval that says you can borrow 200k and you have 200k in the bank, then that means you can buy up to 400k worth of house or thereabouts (not considering reserve requirements which is typically 3-6 months of mortgage payments). If you're approved for 200k and you have 800k, then you could buy 1 million. Having 200k or 800k in the bank doesn't do anything to what you can borrow. That's all controlled by your income. And if you have 0 income and nothing in the bank but have house equity, then you can't borrow anything or buy anything. At least with a conventional loan.
So if guy above has $1M in the bank, I'm assuming it's earning interest. So that's about $2,000 a month coming in. That interest isn't counted as income?
Originally Posted by atikovi
So if guy above has $1M in the bank, I'm assuming it's earning interest. So that's about $2,000 a month coming in. That interest isn't counted as income?
Usually if you have a million, it's probably in stocks or mutual funds so probably not paying interest. But I suppose if it were in a CD paying some fixed interest, then I suppose it might be considered income. But with a conservative DTI of 33%, that only allows you to have a monthly mortgage payment of $666 which would also include taxes and insurance. So about a 140k loan not including taxes and insurance, maybe 100k or less depending on how bad taxes/insurance is in your area.
So if guy above has $1M in the bank, I'm assuming it's earning interest. So that's about $2,000 a month coming in. That interest isn't counted as income?
Usually if you have a million, it's probably in stocks or mutual funds so probably not paying interest. But I suppose if it were in a CD paying some fixed interest, then I suppose it might be considered income. But with a conservative DTI of 33%, that only allows you to have a monthly mortgage payment of $666 which would also include taxes and insurance. So about a 140k loan not including taxes and insurance, maybe 100k or less depending on how bad taxes/insurance is in your area.
Well, he did say BANK. I guess most people don't have that much savings, but the banks were giving loans to people with pretty low credit scores or poor history, but if you have $1M cash, you're too risky to lend to?
4WD
$50 site donor 2024
With a home mortgage - it's pretty clear what the security asset is for the lender.
They want income, credit report, and 20% down please …
My wife wanted to lower the down payment on a weekend place we got two years ago … wanted to show them our net worth etc.
They were not interested in that … So had to take money that was earning good money and plop it down on the place ...
They want income, credit report, and 20% down please …
My wife wanted to lower the down payment on a weekend place we got two years ago … wanted to show them our net worth etc.
They were not interested in that … So had to take money that was earning good money and plop it down on the place ...
Originally Posted by atikovi
Well, he did say BANK. I guess most people don't have that much savings, but the banks were giving loans to people with pretty low credit scores or poor history, but if you have $1M cash, you're too risky to lend to?
Nothing to do with risks. It's just guidelines. Max lending is affected by DTI. Can't exceed 33-38%. In the old days sometimes you could get an exception for one or two items and maybe they used to go to 50% DTI. Not sure if you can even do that anymore. No/very low income means you're exceeding DTI. No longer conforming.
Risk is about down payment, credit score and income. Plus approval of the loan is also based on appraisals and the property you're buying. You have to put that all together to get a clear to close from a bank.
Well, he did say BANK. I guess most people don't have that much savings, but the banks were giving loans to people with pretty low credit scores or poor history, but if you have $1M cash, you're too risky to lend to?
Nothing to do with risks. It's just guidelines. Max lending is affected by DTI. Can't exceed 33-38%. In the old days sometimes you could get an exception for one or two items and maybe they used to go to 50% DTI. Not sure if you can even do that anymore. No/very low income means you're exceeding DTI. No longer conforming.
Risk is about down payment, credit score and income. Plus approval of the loan is also based on appraisals and the property you're buying. You have to put that all together to get a clear to close from a bank.
Here is what I discovered yesterday in speaking to several hard money lenders: They all want 2 to 2.5% in points. So a $500K loan for 90 days would cost at least $10K. One shyster said that they would have to secure a lien on my existing property plus the new property and I would have to pay interest only on those loan amounts for each month that I had the money. That would cost me well over $20K in fees.
Regarding possibly renting the new home for a couple of months until I can close; the area that I am looking to buy is in a Southern California mountain community. Many of the homes there are second homes for weekends or holidays and are owned by people who bought them outright and aren't strapped for cash. This is where having a local agent working for me may help. i would rather pay a couple thousand a month in rent than pay $10K in loan fees.
My last option may be to talk to my brother in law. I hate to get family involved but he is the owner of a very successful business and may be able to fund me for 90 days. I would have him draft a promissory note and keep everything legal and see if he can do it for 1%. Won't hurt to ask and he knows I am good for the loan.
Regarding possibly renting the new home for a couple of months until I can close; the area that I am looking to buy is in a Southern California mountain community. Many of the homes there are second homes for weekends or holidays and are owned by people who bought them outright and aren't strapped for cash. This is where having a local agent working for me may help. i would rather pay a couple thousand a month in rent than pay $10K in loan fees.
My last option may be to talk to my brother in law. I hate to get family involved but he is the owner of a very successful business and may be able to fund me for 90 days. I would have him draft a promissory note and keep everything legal and see if he can do it for 1%. Won't hurt to ask and he knows I am good for the loan.
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