Financing in 77449>Question Details

Htoutloff, Home Buyer in Houston, TX

Downsizing - have to sell my home and purchase another - best options?

Asked by Htoutloff, Houston, TX Tue Oct 2, 2012

I have a VA loan that can be refinanced to a lower rate. That is an option that would allow me to save two months worth of my mortagage - important because I currently have no savings. But it will also add money to my loan over the long run with the new closing costs/fees- may be rolled into the new loan; but I could save the 2mo mtg for downpayment on the new home.

OR, I can sell this house and purchase another smaller residence using a new VA loan with no down payment. Not sure.

Or, I can sell this home and rent for a few months -which will be hard since I own pets and it is going to be physically difficult for me to move once, let alone twice. (I am disabled.) But I could probably save up for the down payment that way.

Or perhaps there are other options I haven't thought of. But does anyone have any advice on what may be my best option? I will be selling my $140,000 home to downsize to one that is $40 - 60,000 and have very good credit - just no savings.

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Hello Htoutloff,

As far as an opinion no one can truly answer that question until they know your financial goals. I can tell you what you may potentially qualify for though.

If you have a VA loan now, you are correct, you can refinance and skip two months of payments to put towards savings. You could go with an FHA loan at that point and only have to put down 3.5% of the purchase price for down payment. You would have to qualify with a debt to income ratio with both payments against you though. FHA allows for debt to income ratios on a primary home of 47% of your income towards your new payment but a maximum of 57% for all debts including your new home.

If you sell your home you can purchase using your VA benefits with no money down and even have the seller pay your closing cost as the VA allows up to 6% of the purchase price to be given to you from the seller to pay for your closing cost.

I hope this helps, feel free to contact me for further questions and concerns.

Joshua Lerette - Sr. Loan Officer
Residential Finance Corp.
2 votes Thank Flag Link Wed Oct 3, 2012
Unless that you want to incur substantial cost associated with selling your house and renting another one, your first option is the best one. Try to refinance your your VA loan at a lower rate. You should approach your lender to analized your personal financial condition and explore your options.

Best of Luck,

Maria E. Cipollone

Century 21 Tenace
1 vote Thank Flag Link Wed Oct 3, 2012
Good morning, Speaking with the Va mortgage about refinancing would be a good decision. The rental makert is challenging, all the good rentals go the day that they hit. The home market under 80k is also very challenging and the inventory is not very good. If you would like to further discuss you needs please call or email when you get a minute. Thank you and Have a Great Day!

"Selling Real Estate Since 2001"
Best Regards,
Richard Luebeck
Elite Texas Properties
12320 Barker Cypress Road
Suite 600-224
Cypress TX 77429
Cell 832-646-2886
1 vote Thank Flag Link Wed Oct 3, 2012
PS , Thank you for your service to our country. It is very much appreciated!
0 votes Thank Flag Link Wed Oct 3, 2012
Your best option will be to speak to your current VA mortgage holder about refinancing and keeping your current home.

Selling and then moving into a rental would not be financially sound. Rental rates are at their highest right now, and you'd probably not find anything worth living in that is less per month than your current PITI or what your new PITI will be after you refinance.

Selling and moving into something priced below $60000 could be even more of a challenge. At that price point most homes will need major renovation, and most likely will not be move in ready. Renovations are costly and time consuming. Depending on your disability are you able to rehab a home, and where will your pets live during construction?

Your best option is have a candid discussion about your financial situation and what you would like to achieve with your lender and find a loan modification or refinance option that will achieve your goals. With mortgage rates as low as they are you will realize the most benefits by lowering your current house payments and staying where you are for a few more years.

I hope this helps you.
Best wishes for your success,
0 votes Thank Flag Link Wed Oct 3, 2012
I have the solution and it's a win win. You can contact me at 832-398-1531. My email is
0 votes Thank Flag Link Wed Oct 3, 2012
A couple things to think about. First talk with your VA loan officer about your options, he or she will have all the answers, and be your best guide to go over your options. Second, I can help you sell, but are you sure you want to move to a $40-60,000 home? If it's a necessity, fine. But you might not like the location of these homes, much less the condition. Call me at 281-610-3077, and I can do a search for you showing the homes and their location. Then if you find something interesting, we'll go look. Or if you find you want something better, we'll go from there. Trying to lease for a few months is hard to find. And as you know, why through away money leasing, when you obviously will have funds to purchase again from the sale of your home.

Thank you,

0 votes Thank Flag Link Tue Oct 2, 2012
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