So you’ve found a home you want to buy but there’s one problem: your current home hasn’t sold yet. We can see how this can be concerning, and maybe the house you are wanting to buy is perfect but you’re worried it won’t be on the market for much longer. You may need to do a quick move for a job. Whatever your needs are, it’s our hopes this article will provide you with the information you need to figure out how to move when your house hasn’t sold, yet.
The FHA, Fanny Mae, and Freddie Mac all have rules about getting a second mortgage while you still own your home. If you want to secure an additional mortgage, you will have to clear a few hurdles.
How to Move if Your House Hasn’t Sold Yet in Louisiana
First off, to qualify for a second mortgage through the FHA, you must meet certain qualifications.
For the FHA to approve your second mortgage, you need to have approved reasons for moving right away. These qualifications include relocating for a job, larger family size, or a separating from a spouse. That being said, they will also work with borrowers on a case-to-case basis. It wouldn’t hurt to go to the lender and see what they could do for you. They may also be able to point you in the direction of more options or institutions that can assist you in your situation.
Asking family can be another route, but be sure to put everything in writing.
Family may want to and be financially able to help you in a time of need. However, terms need to be laid out. Put it in writing that you will pay them back after the sale of your first house. Maybe even offer to pay them some kind of interest if they need agree to help you. This may incentivize them to lend you the money. When working with family and money, clarity is key. You don’t want money to get in the way of the family relationship. It may also be a good idea to agree to pay them a certain amount month to month until your house sells. Here’s a good article we found that gives more information about how to setup this kind of borrowing plan: Borrowing From Family and Friends to Buy a House
A bridge loan or as it’s sometimes called, a “wrap” loan can help “bridge the gap while you attempt to cover two house payments.
These types of loans will take both mortgage payments and combine them into one interest-only payment. These are typically short-term loans lasting 6 months to one year. The downside is their interest rate is typically 2% higher than the normal interest rate. According to an article by Quicken Loans, the main reason most home buyers turn to bridge loans is to allow them to put in a “contingency-free offer” on a new home, meaning that they are saying they can buy the house without selling their existing home.
Lenders have different requirements for these times of loans but you must typically have great credit and be financing less than 80% of the value of both houses. To learn a little more about bridge loans visit this link: Bridge Loans: Everything You Need to Know and How They Work in Real Estate.
While it may not be your first choice, you can talk to your boss or plan administrator about borrowing from your 401k.
If this is the option you choose, make sure you understand how the tax penalties work and pay yourself back after the sale of the original home so you don’t jeopardize your retirement savings. Typically when borrowing from a 401k, you can only borrow 50% or $50,000 whichever is cheaper.
Try to offer the seller of the second home, the option to rent it back from you for a few months.
Depending on their situation, the original owners of the second home may be open or even want to take their time moving. This may not work for all situations but it wouldn’t hurt to ask. They could rent it from you for a while until your home finally sells. It could be a win-win for everyone.
Add in a contingency in your offer allowing you to close on the new home only after your home has sold.
If your home is new to the market and is priced well then it should sell quickly. When you put in your offer for the second home, put in this contingency and let them know this will not delay the sale of their home. You can do this by agreeing to close on their property during a specific time frame.
Whether you are looking to buy or sell, we can help you with all of your Real Estate needs! Fill out this short form, or give our office a call today! (225) 366-7679