Financing in 95130>Question Details

Familyof5, Both Buyer and Seller in 95130

Is there any way to buy a new house with the equity in the one we own now? We would sell the old one once we have the new one.

Asked by Familyof5, 95130 Wed Dec 14, 2011

We need to move 5 mins away from where we are now for a better school for the 3 kids we have and really dont want to rent for 6 months or a year after we sell our current house.

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Claudia Muller Gravelle’s answer
We have a lender who will allow you to utilize your current residence's potential rental income as long as it has 30% equity. This lender will require an appraisal of your departing residence to ascertain equity position.
If you do not have the equity position, this lender will be like all the rest, qualify you at both payments.
As long as you have been making your payments on time and you can qualify for both payments, you will be able to finance the new home on conventional financing.
The lender will ask you to explain your reason for the move.
Your area is one of the markets that have rapid marketing times for homes.
A make sense explanation would be that you want to purchase in a particular area and do not want to have to write a contingent contract.
Your intent is to sell your property, which should happen quickly, but if it doesn't you are prepared to offer it as a rental.
Maybe I am missing something in your question, but it makes sense to me in the Silicon Valley. :)
1 vote Thank Flag Link Sun Jul 1, 2012

Please read my question again, I did infact ask the appropriate questions. FamilyOf5 didn't specify answers or volunteer information so it's all of our 'best guess' what may or my not apply so I covered both. You obviously have the same experience doing this type of transaction as I do and this buyer is benefiting from our responses.

As far as school district goes, I've never seen that fly with an underwriter alone. If there are additional reasons (but excluding an increase in family size), then I could maybe see that but the family size issue is the easiest way to facilitate another owner occupied purchase via government financing FHA/VA even if you currently have one.
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1 vote Thank Flag Link Fri Dec 16, 2011
Family of 5:
With regard to Rob and Deborah's comments, both are right, but the way to buy as a second home or new first home is simply to sign the "occupancy affidavit". This is a piece of paper your lender will give you to sign that is a promise to move into the new house within 60 days of buying it. The time can be extended if you first have to renovate the new home. Your loan professional will help you write a letter, if the bank needs it, explaining why you are moving nearby to your current home. This is not rocket science or unusual. People move nearby to their present home a lot. Can be because your family is growing, in-laws are moving in, changing school districts, downsizing, want different home features, pretty much any reason you have to move is a good enough reason to move. Hence, it is a good enough reason to buy a new home.

Since I work both as a real estate agent and as a loan officer for a mortgage bank, I can walk you through the entire process and secure a good loan for your new home. You may call me any time at 408-639-0211.

Mitchell Pearce
1 vote Thank Flag Link Fri Dec 16, 2011
I have to respectively disagree with Rob regarding the need to buy as an investment property. As long as you can justify and rationalize the reason for move in close proximitity to your current home (school district and size of home, for example) there should be no issue with you buying owner occupied. It does require some additional documentation and explanation; however, it certainly can be done. I helped my son and his family do exactly the same thing just a few months fact, the children did not mover schools, they just bought a larger home. We used a VA zero down loan product for the new purchase. FHA would work as well.

Your answers are really in the details of your specific situation. An indepth conversation with a mortgage professional will provide you all of your options. Certainly, don't be chided into the need to buy as an investor...I do not believe it would be necessary.
1 vote Thank Flag Link Fri Dec 16, 2011

What type of financing do you have on your current home and how many bedrooms/bathrooms do you have? If your home can't reasonably support the number of family members you have and you're moving to a bigger home, then it may be possible to get this done for you. If that's not the case, you'll have to buy the home as an investment property due to the proximity and likeness of the new home to your own (if you were moving from a condo to a larger single family, that'd generally be acceptable.

Bridge loans are very rare now (a loan that uses the equity in a property you currently own as a down payment on a new property). If you have sufficient equity, you could of course, take money out of our home and use it as a down payment on the new one but if you could do that, you probably wouldn't be posting on here, yes? Assuming you don't, plan to put down 15-20% for a standard conventional loan. You'll need decent credit te qualify for an investment property as well, I hope you took care of your credit these past years..

Additionally, you'll have to qualify for the new mortgage without using any ("projected rent" is always calculated by the appraiser -- even if you plan on living there) rental income to offset it if you don't currently have a two year history of being a landlord.

If the home you're buying is a HomePath eligible home, you could get by with a mere 10% down payment
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1 vote Thank Flag Link Thu Dec 15, 2011
Hello Familyof5,
What you are looking for is a bridge loan but at least here in CA they are currently illegal, or unavailable for a primary residence so you would in fact have to complete a cash out refinance on your current home, or add second mortgage or a home equity line of credit in order to free up the cash you need to purchase the new home. The problem will be, you won't be able to get all of it. You will likely only be able to finance up to 80% of the appraised value.
As others have said you could by the new home with a little or no down loan product but unless you are a veteran, or a low to moderate income household in a rural area (USDA), you will have expensive mortgage insurance included in your financing on the new home. You will have to refinance to get rid of the mortgage insurance once your current home sells.
0 votes Thank Flag Link Mon Jun 4, 2012
You would have to do a cash out refinance of get a home equity line of credit to access your equity (heloc). Helocs max out at 80% LTV these days.
0 votes Thank Flag Link Fri Dec 16, 2011
You may also qualify for one of more portfolio lenders that use common sense underwriting. We help qualified borrowers with special circumstances through or diversified lending partnerships. Best wishes.

Happy Holidays, Rudi
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0 votes Thank Flag Link Fri Dec 16, 2011

The short, easy answer is "yes, it can be done"...provided there is enough equity in your home and a multitude of other conditions are correct. To get a real answer, you will need to discuss your personal financial situation with a lender or mortgage broker. You can contact Brian LeBars, Vintage Mortgage, in Pleasanton to discuss your options. I've provided you with his website below.

Good luck and enjoy the new home!

Sally Blaze
0 votes Thank Flag Link Wed Dec 14, 2011
Thanks for posting the question. I think you have great responses from everyone. If you need any further assistance, please give our team a call.
Best wishes,

R.E. Broker/MLO
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0 votes Thank Flag Link Wed Dec 14, 2011
How much equity do you have in your existing home and when do you plan to make the move ? If you are going to use the equity, it may take a while to access your funds. It is a viable option if you can financially qualify to do so.

Jim Mauldwin
Intero Real Estate
Licensed since 1991
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0 votes Thank Flag Link Wed Dec 14, 2011
The easiest answer is first to first call a mortgage banker, such as myself, and discuss your income, how much equity you currently have in your current home, what other assets you have. You may be able to do a Home Equity Withdrawal on the first home to create a down payment on the second. You may be able to use money from the seller (closing costs) toward purchase. You may be able to put very little down on the second home. Maybe even only 5%. The variables are fairly extensive and are individual situation specific. There is no obligation if you talk to me.
Mitchell Pearce
0 votes Thank Flag Link Wed Dec 14, 2011
Yes. That can be done with what is called "bridge" financing. I do have sources for "bridge" financing and have represented a number of clients where we used "bridge" financing to buy the next house before the seller was ready to sell the first house.

For mare information, please call me at my cell phone: (408)509-6218

Thank you,
Charles Butterfield
Real Estate Broker/REALTOR
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address:
0 votes Thank Flag Link Wed Dec 14, 2011
Hello Family and thanks for your post.

Oh how the times have changed! Back in my dad's time, one did not sell their current home until they found a "new" home, and at that time, the Sellers would agree to allow the Buyer enough time to sell the home. This can still be done today--it's called a "contingent sale"--but many Sellers will not agree to accept an offer that is predicated on the successful sale of the buyer's old home to complete the purchase of the new home.

Nowadays, mortgage companies want to "see" the money you'll be using as a downpayment sitting in the bank account ("seasoning" is what they call it)--not accumulating equity in your current home, so having a sufficient cash to cover the downpayment is one hurdle that must be surmounted to buy a new home while keeping the old one. Also, most buyers have to have a limited amount of debt to qualify for a new loan, so keeping the old home often pushes those important ratios up too high to qualify for a new loan.

Obviously, everyone's situation is different, so to really know if your income and debt ratios are acceptable to the mortgage company, you will need to speak with a mortgage broker, take your income or pay stubs, tax returns and necessary paperwork to the broker or bank and find out what you can buy and if there are any loans available that will allow you to keep the current home while buying the new home. I do have and have worked with Buyers who were able to keep their old house while buying their new home, but they tended to have a lot of available "cash" for the downpayment and income sufficiently high enough to qualify for both loans at the same time. Again, however, each situation is unique and only a qualified mortgage broker or lender can really help you assess what you can afford and what loan options will be available.

Good luck!!

Grace Morioka, SRES
Area Pro Realty-People's Choice
0 votes Thank Flag Link Wed Dec 14, 2011
It depends on your finances. You can also negotiate with the buyer of your home or make it a condition that you have a rentback period after close of escrow, etc. You can also buy the new one contingent on the sale of your old home.

You have a lot of options. I've had over 100 transactions where the sellers bought after they sold. No one ended up in a rental and moved twice. We planned for it to work out the right way ahead of time.

Mark Burns, Realtor
Coldwell Banker Elite - Top 2% Worldwide
President - PRDS, Contracts and Forms for Silicon Valley Residential Real Estate
DRE# 00896552 Licensed since 1985
Over 600 Homes Sold in Silicon Valley
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0 votes Thank Flag Link Wed Dec 14, 2011
My suggestion is for you to schedule an appt. with a mortgage professional. They will look at your income, debt. and equity and advise you of your options. Each person is unique and we would not be able to answer this effectively for you.

408-377-8876 Dave Setti with Turnkey Mortgage is a trusted resource.

All the best to you.
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0 votes Thank Flag Link Wed Dec 14, 2011
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