Buying a new house after recently refinancing ours.

Asked by biggoldbear, Poway, CA Mon May 13, 2013

We recently refinanced our house (living here for 5 years). We weren't planning on moving any time soon, but a couple houses have come on the market recently that we're very interested in. We currently owe 350k and our house is appraised at 460k. We have ~70k in cash reserves (~50k in 401k) and we are interested in houses in the ~700k range. I'm thinking an 80-10-10 type loan would be our best option as I would prefer to not have PMI. One concern I have come across is having refinanced our current house as a primary, if it will be possible to buy a new house before selling ours. I know there can be issues having two primary loans originated within 12 months, but that might be overcome by a letter of intent and depending on the lender. Any advice?

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Daniel Lehman, , San Diego County, CA
Mon Jun 3, 2013
The 80/10/10 is not an issue at all. The issue you might have is with your first home occupancy affadavit. You wont have an issue with your CURRENT lender, it just might be an issue with the new lender. However, nothing that cannot be overcome...

How did this situation turn out?


Daniel Lehman
WJ Bradley Mortgage
0 votes
Robert Spino…, Mortgage Broker Or Lender, Mill Valley, CA
Tue May 14, 2013

The reason for all of the concern and confusion stems from the Primary Occupancy Affidavit you signed when you refinanced your home (as a primary home). This document states your intent to live in that property for at least one year. You can reference this document in the copy set of your closing paperwork from the refi.

Some scenarios (combination of refi and new purchase) are very difficult for a lender to accept, others can indeed work with a strong letter of intent and supporting documentation. If your loan officer is helping you with this assessment, you're fine. If not and you need help, just get in touch.

Rob Spinosa
0 votes
Ana Campos, Agent, San Diego, CA
Mon May 13, 2013
I see many lenders have answered your questions. With that said I would love to assist you in finding the perfect home for you and your family. I am a full time realtor and have a great success rate in getting offers accepted rather quickly. Call me so we can chat or email me. 858-480-9271.
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Thierry Abel, Mortgage Broker Or Lender, Corte Madera, CA
Mon May 13, 2013

Yes we do these 80/10/10s in California (refi and purchases) and they have been very helpfull

90% financing (80/10/10) for max combined liens NO grearter than $750,000
85% financing (80/5/15) for max combined liens between $750,001 – 1 Million
OWNER OCCUPIED ONLY– no second homes; non owner or non-owner occupants
Single family homes/condos and O/O duplexes OK. No triplexes or fourplexes.
Cannot have more than 6 “non subject” properties – financed or free and clear.
We need 700 Fico for combined liens < 750K and 720 for combined liens > 750K
The second is a concurrent Home Equity Line of Credit.
HELOC Terms; 10 year period with min I/O payments; 20 year repay period; $50 annualEarly Term. Fee Max HELOC $350,000 Min HELOC $7,500

Call me if you want more details as this is a great purchasing tool for your buyers.

0 votes
Great to hear, How long have you been doing these? Just a few months back it was hard to find anyone offering this.
Flag Mon May 13, 2013
Katie Q. And…, , San Diego County, CA
Mon May 13, 2013
hi biggoldbear,

I would go back to your mortgage broker that helped you refinanced your house. Since they have all your financial docs, they would be able to tell you what financing options they have with your current income and finances to determine what they can do for you to get qualify for the home. They can give you a faster answer on what exactly they can do for you.

Best of Luck,
Katie Q. Anderson
Keller Williams
13400 Sabre Springs Parkway, Ste 100
San Diego, CA 92128
0 votes
Thierry Abel, Mortgage Broker Or Lender, Corte Madera, CA
Mon May 13, 2013
Letter of intent is fine, you should be OK as you are moving up 460 > 700 ...Who really want to list their house in this market, without having secured a new house to move into...We will even allow rental income on the departing property, if needed in order to qualify carrying expenses for both property....Now you might to check for "pre-pay" penalty on your current mortgage, even if you have a PP penalty, you want to check if it is hard or soft (Soft prepayment terms can allow you prepayment without penalty under the terms of selling the home. Hard prepayment does not allow any exceptions without penalty.)

You will be OK.

Let us know if we can assist...WE DO 80/10/10 PROGRAM WITH NO MI
0 votes
Rashard Scott, Agent, San Diego, CA
Mon May 13, 2013
I have lenders that could assist you with financing and could answer any questions you may have regarding your situation. I could provide you with free access to the MLS to assist with your home search and also access to exclusive listings not yet on the MLS. Thank you for your time and I look forward to hearing from you soon!

Rashard Scott
Keller Williams Realty/RBD Residential

CA DRE# 0170306
0 votes
Royce Kemp, Agent, San Diego, CA
Mon May 13, 2013
I'm not aware of anyone doing 80/10/10 loans. Is your goal to sell your home or to keep it as a second? If you intend to sell, but don't before buying a new home, you'll have to qualify as if you were keeping the second home. And not selling your home, but submitting an offer on the new home with a contingency to sell your current home, will likely not get your offer accepted. So more than likely you will want to sell first, possibly with a leaseback option. In this seller's market, you can easily get a buyer to agree to this.

You should speak with a lender/mortgage broker about how much home you could qualify for. Avoiding PMI might be out of reach, but you want to avoid a jumbo loan as well. With today's market, your appraisal for a refi is probably not reflective of what you can fetch out in the open market, so might be looking at more equity than you think. Assuming you don't have a prepayment penalty (which are rather rare), then you will likely want to sell your home, with a lease back option (if necessary). Once you're in escrow, start putting offers on the homes you want.
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0 votes
Paschal Curt…, Mortgage Broker Or Lender, San Diego, CA
Mon May 13, 2013
Good Afternoon,

There isn't an actual underwriting guideline pertaining to this but an underwriter may ask for a letter of explanation explaining the situation.

Don't see this as an issue.

Feel free to reach out to me for more information.


0 votes
Charles Dail…, Mortgage Broker Or Lender, St Paul, MN
Mon May 13, 2013
This is a very hot topic. There are some investors that have blanket prohibitions on this and others that will work with reasonable explanations. My company funds and sells loans to investors with both guidelines so we can handle reasonable requests. Let me know if I can help and see the web reference below for a more thorough understanding of the issue you're confronting.
0 votes
Ron Thomas, Agent, Fresno, CA
Mon May 13, 2013
Before you go any father; you might look at your recent loan papers and see if there is a clause about PREPAYMENT PENALTY or, possibly, RESTRICTIONS regarding a waiting period for selling or paying-off the loan. You may also have a restriction about renting the place out.
You may be LOCKED-IN.
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