Movin On Up

Dated: 09/24/2018

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Do I need to sell my home before I can qualify for a new mortgage on Another Property? 

Although every situation is different, it is not uncommon for home buyers to qualify for a mortgage on a new home while still living in their primary residence. As a matter of fact, I encourage my "move up" sellers to do so.  That way we know exactly how much they can qualify for, we an look at the estimated proceeds from the sale of their current home, any debt that will be paid off during the sale and how that will help increase their purchase power (as I like to call it).  


Maybe you are outgrowing your current home, or are moving from a home with an alley garage to a larger detached house with more yard space. There are various reasons why one might be motivated to move up. As a Realtor has has completed many. many, many move up sales both contingent and concurrent. I am going to go over some of the questions I have been asked in the past. If you need any more details please give me a call and I will be happy to go over your needs specifically. 

So...do I have to sell? 

Every play monopoly? Whoever owns the most real estate in the end wins right? Well Monopoly is a game. Real life is very different. The answer is NO- you may not have to sell your current home to buy another home. Some lenders I work with can use projected rental income on a current residence for the leg up home. In real life though, it's hard. Most of my clients wind up renting their first home for a year or two and then selling it. They get tired of the renter phone calls and headaches. They also usually find out that the numbers do not always add up. I am a number person- the budget has to align otherwise why do it? 


What if I Rent my current home? 

Hey if the numbers align GO FOR IT! I am team YOU. You will however have to qualify for both mortgages. Most lenders would like to see at least 25% equity in the current home before it can be considered a "rental". Even then, most lenders can only use 75% of the projected rental income to help your PURCHASE POWER on your move up home.  



What if I can't qualify based on both mortgage payments? 

You don't need to be a financial wiz to figure out the answer to this one. If you can't qualify for both mortgages then you either have to decide not to purchase the new home OR to sell your current home.  Selling one home and buying another at the same time is pretty common now that we are in a market where home sellers have equity. Is it stressful? Yes. BUT buying or selling a home is stressful as it is. I like to create a timeline for the move right when we get the contract and help remind my clients of their timeline.  Scheduling helps eliminate the headache. I've never had a seller become homeless (knock on wood).  


The market is changing, it is evolving every week. You need a strong realtor to represent you, and help negotiate the best scenario for you and your family.  Give me a call if you need any more help or advice regarding the market. 

I'm always working. Alexandra Vinson Coldwell Banker Royal Direct : (619) 370-4576 License#01344084

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