I’m at a point where I want to upgrade and got pre approved for a wild amount (in my opinion of $600k), but unless I sell my current house, I don’t have the 20% down payment and I don’t wanna be house poor or homeless. Do most people really have like $60-100k just sitting around to buy a new home? Or am I the weird one who doesn’t have a ton of savings? I live in Ohio for reference and combined income is like $170k a year. I want to sell my current home to use as down payment towards the new one but I have no idea how to navigate my situation. Ideally I’m looking at homes in the high $300k range tops. Edited to say that my realtor estimates my house will sell at a point that will give me a $70-120k profit before any fees
How do most of y’all buy a new home as existing home owners?
byu/JefTheDrunkBates inRealEstate
Posted by JefTheDrunkBates
15 Comments
About to close on a semi-custom built. Had to sell my townhome as part of the contingency for the builder to even start. Been in an apartment since May.
recently bought bigger home – purchase was contingent on us selling current home. that allowed for 20% down, definitely couldn’t have bought without selling. have savings but not that much, similar combined HHI!
You don’t need 20% down, you can buy with as little as 5% down. Once you sell your house, you can recast your mortgage or pay a ton of principal down so you’re not paying PMI. Or, you get a HELOC on your current house and take out enough for a down on the new one. Or you write a contingent offer, but that limits your opportunities.
Talk to your Realtor about how to navigate this. Selling and buying within a tight window happens all the time. The only way it limits you is a small buyer pool that may not want to wait for you to find your next home, and a seller pool that may not want to wait for your hope to sell to close. Your market will dictate how easy or hard this will be. Alternatively, talk to your lender about loan possibilities to make this happen too.
Most builders will accept a contingency. Its pretty normal.
If they dont expect to sell and live somewhere while waiting for builder
But on contingency that you sell. Usually a short escrow on your sale and a longer escrow on the purchase so that your sale can cover the purchase
Bought and sold in the same day, our buyers and sellers agreed to use the same title company so we could do back-to-back closes (also in OH). Our buyer also agreed to a short rent back so we didn’t have to do a temporary move since it all came together with perfect timing for us. It’s a lot to coordinate, but if you live in a market that is moving fast enough to know you can sell but slow enough you can put in prior sale contingencies for the purchase, it’s doable.
It’s called a contingent sale. Find a good agent to help u navigate your situation
I leveraged my 401k. I’m lucky enough that interest on my 401k loan just goes straight to me. So I took out a loan and paid it off with money from selling my other home.
It was out for a couple months. I paid like a $55 fee for the loan and 7% interest on those couple months then paid it back off.
We bought and sold the same day and were lucky enough to get a 5 day leaseback so we had time to move.
You can borrow against your brokerage portfolio
We sold our house and moved in with in-laws right before Christmas of 2022.
We didn’t move into the new house until 8 months later. It was a rough year!!!
But we needed the funds from the sale of our house to be able to purchase the new house.
Sell your house and use the proceeds to buy the next house. You can put in the contract that the purchase of your new home is contingent on the sale of your old home.
This is what bridge loans are for
401k loan or roth IRA rollover lets you temporarily ‘borrow’ from your own retirement funds and then put the money back (with some fees and such). There is a 60 day timing window but this eliminates home sale contingency.