Can we get a new mortgage before putting our old house on the market? We live in Ohio and my husband has

Asked by Robin, 44095 Wed Jul 16, 2008

just accepted a new job in Floriida. It would be so much easier to paint and carpet and generally fix up the old house after we're moved out. Houses are not selling well in Ohio and we plan to price to sell, but it could take months to sell. Do you think we can still get a new mortgage? We could probably pay off the old mortgage if we had to, but would it be necessary? Any advice?

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11
Other/Just L…, , Fleming Fitch Grant, Holly Hill, FL
Wed Jul 16, 2008
Lending answer:

You will have to document enough income to carry both mortgages.

Fannie Mae has recently issued new guidelines which make it more difficult in some situations to purchase a second property.

If you convert your Ohio home to a "Second Home" (ie do not rent it out) you must qualify to carry both mortgages AND hold at least 6 month's worth of mortgage payments with taxes, insurance, and association fees (if applicable) in reserve beyond down payment and closing costs.

If you convert your Ohio home to an Investment Home (ie rent it out), you must prove at least 30% equity in the home (Realtors, note that Fannie will accept a BPO for this), provide an executed lease, and provide proof that the tenant has paid a security deposit and/or 1st month's rent. As before, only 75% of the gross rent can be used as qualifying income to offset the mortgage, taxes, and insurance on your Ohio home.

If you cannot prove 30% equity, then the rules for Second Home as above apply.

You should speak with a Realtor ASAP about the opoprtunities and challenges in renting out your Ohio home, since that decision needs to be made before you apply for a new mortgage.
1 vote
Julie, , 33901
Tue Mar 31, 2009
Bridge loans are temporary loans that bridge the gap between the sales price of a new home and a home buyer's new mortgage, in the event the buyer's home has not yet sold. The bridge loan is secured to the buyer's existing home. The funds from the bridge loan are then used as a down payment on the move-up home.
0 votes
Ute Ferdig, Agent, Auburn, CA
Thu Jul 17, 2008
Hello Robin. Typically, you can't get a loan on a property that's on the market or has been on the market recently. It sounds like you want to get a home equity line of credit and whether or not you can get such a loan will really depend on the value of the home and your debt to income ratio and you should talk to a loan agent about this. Since you state that you could pay off the old loan, it sounds like you have the money to make the repairs and you don't really need a new loan. Even if you can get a loan, you will want to factor the cost of getting the loan (closing cost) into your calculation. I would also consult with a real estate agent and find out whether it would not make more sense to sell the house "as is" and lower the price or give a credit to the buyer. That way you don't have the up front cost and you won't run the risk of not recouping the cost of the repairs. The credit will also give the buyer the added benefit of being able to pick the carpet and paint color. You may also want to consider offering a "gift" under the Nehemiah program because participating in the Nehemiah program will result in a higher net for you than what you'd be able to get if you just lower the price or give a credit without using the Nehemiah program. Good luck to you.
0 votes
Jennifer Pow…, Home Buyer, Ormond Beach, FL
Thu Jul 17, 2008
Robin,

It is possible to qualify for a new mortgage before you sell you old home. However, it all depends on your credit, income and assets. I am happy to review these items with you and determine if that would work for you. Please feel free to contact me at 386-882-5699 or by email at jennifer_powers@countrywide.com.

Warm regards,
Jennifer Powers
0 votes
Jennifer Pow…, Home Buyer, Ormond Beach, FL
Thu Jul 17, 2008
Robin,

It is definately possible to get a mortgage on a new house before you sell you current home. However, that all depends on your whole credit, income and asset profile. I am more than happy to review that with you and determine if that is a possiblity. Please feel free to contact me at 386-882-5699 or by email at jennifer_powers@countrywide.com.

Warm regards,
Jennifer Powers
0 votes
Brent Bester, , Columbus, OH
Wed Jul 16, 2008
Robin,

You can refinance your house if that was what you were looking to do. You would still be responsible for that mortgage -even if you guys moved. If your house has not already been put on the market you should be fine to get a new mortgage. I guess it really depends on what your trying to accomplish exactly. Feel free to give me a call if you are considering refinancing and I can go over the pro's and cons if you decided to sell it. Were you looking to get money to improve the house? I guess my main question is why you are wanting to refinance it, if you plan on selling it in this market?

Brent Bester
Mortgage Professional
614-622-8916
0 votes
Shonda Campa…, Agent, Jacksonville, FL
Wed Jul 16, 2008
I would suggest you talk with a loan officer. They would be able to give you the correct answer. I have seen it done, but every situation is different. Wells Fargo is a great one or if you like your current company maybe give them a call first.

Where in Florida are you relocating to?
0 votes
Drew, Home Seller, Pensacola, FL
Wed Jul 16, 2008
I just purchased a new home and have yet to sell the old house. I'd get in touch with a bank and see what you can do or what you would be approved for. I was rather shocked how much the bank claimed we could get, this day and age. We used our local credit union and got an excellent rate and they only required 5% down as the area we moved to was considered a stable market to the bank. We would have needed 10% in a declining market. They did question us numerous times about the house we are selling. The Credit Union didn't require anything extra from us on this loan compaired to the loan on the first house. I don't feel comfortable carrying both the loans for an extended amount of time personally and if the house doesn't sell in my time frame it will go up for lease/purchase or rent.
0 votes
Mott Marvin…, Agent, Sunny Isles Beach, FL
Wed Jul 16, 2008
Yes you can get a new mortgage for your Florida home purchase. It may be easier to qualify once your Ohio property is sold, but as you mention; it may take time. Price is what sells and of course location. With the high volume of properties on the market and increase in foreclosures, being priced properly, ease of showing, pleasant appearance and tidyness are a must.

Hire a professional taht has a strong local Internet presence.
0 votes
Mike Schwieb…, Agent, Jacksonville, FL
Wed Jul 16, 2008
Hi Robin,

What part of Ohio are you from? I am originally from there an I know a lot of good agents that may be able to help you sell your house when it comes time. As far as getting another loan it is definitely possible. The new house in the banks eyes would be considered a 2nd home so there will probably not be as many options. Recently the PMI insurance companies have stopped insuring loans on second homes, with this being said the bank would most likely require you to put down 20% or more so you do not need PMI insurance. Some Lenders will still do a bridge loan so you can buy your new house while your old house is on the market. I know I still have a company that will do a bridge loan in Florida.

Just a quick piece of advice.....The best way to sell your current house in Ohio is to get it priced according to the market. If it is priced just below the market and the home stands out from the rest of the homes on the market it will sell. You will need a good agent that actually understands the market and how to market a house. The days of just putting the house on MLS and sticking a sign in the front yard are over. The agent need to work to get homes sold. It will take a little extra work from you as well to get and keep your house in prime showing condition, but it is well worth it! Feel free to contact me if you have any questions I am always happy to help out another Buckeye! Have a great day!
Mike Schwiebert, REALTOR
Watson Realty Corp - Oakleaf Plantation
mike@MrOakleaf.com
Web Reference:  http://www.MrOakleaf.com
0 votes
Louise Warri…, , Lake Mary, FL
Wed Jul 16, 2008
My best advice is for you to contact a mortgage lender that will give you competent, honest advice. Coldwell Banker Home Loans is available by phone to give you information on your particular circumstance, with no cost and no obligation. You can reach them at their toll free number at 1-866-724-3207. The lending requirements are getting quite a bit more stringent, but it sounds like you won't have problems finding a mortgage product that will fit your needs.

Good luck in your move to Florida. If I can be of any help in your home search, please call me or visit my website to search for florida properties.

Happy House Hunting--

Louise Warring
Coldwell Banker Residential Real Estate
http://floridamoves.com/louise.warring
0 votes
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