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norcal_home_buy
Posts: 4
Registered: ‎02-22-2013
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Would I be eligible to buy a another home ?

Hi All,

 

This is my situation. I live in a home (bought for $750K in 2007 ) , currently appraised for $730K a week back and the outstanding loan amount is $560K. Currently in a conventional loan.

 

I want to buy a bigger home as my family will expand in a year. I want to make that home as my primary residence. Bigger homes in good school districts cost around $1.2M- $1.5M in my area. So my question is would I be able to buy a $1.2M home with around 3% downpayment ? I dont want to sell my current home as my current home will rent for $3000 a month which would cover my current PITI. Is this even possible today ? My credit score is 800+. Household income is $275K, no other debt.

 

Thanks for reading.

Platinum Trusted Contributor
elt1
Posts: 5,118
Registered: ‎01-04-2010
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Re: Would I be eligible to buy a another home ?

[ Edited ]

Sell it and take the loss....in a rising price environment you will do better with appreciation on the new house....there are plenty expenses in renting besides piti....mostly vacancy...plus it is a headache.....if you wait to break even the $1.2 house will have gone up more than your current one...

Silver Regular Contributor
Fishmarty
Posts: 681
Registered: ‎08-25-2012
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Re: Would I be eligible to buy a another home ?

I would have trouble to see if your 3% down wins any bid.

Gold Super Contributor
Jil
Posts: 3,174
Registered: ‎10-24-2011
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Re: Would I be eligible to buy a another home ?


norcal_home_buy wrote:

Hi All,

 

This is my situation. I live in a home (bought for $750K in 2007 ) , currently appraised for $730K a week back and the outstanding loan amount is $560K. Currently in a conventional loan.

 

I want to buy a bigger home as my family will expand in a year. I want to make that home as my primary residence. Bigger homes in good school districts cost around $1.2M- $1.5M in my area. So my question is would I be able to buy a $1.2M home with around 3% downpayment ? I dont want to sell my current home as my current home will rent for $3000 a month which would cover my current PITI. Is this even possible today ? My credit score is 800+. Household income is $275K, no other debt.

 

Thanks for reading.


I can not exactly say whether you will be eligible for 1.2M home without knowing further details. You may be eligible for some amount and it depends on how much monthly PITI current payment. Bank will account both PITI (new home + old home ) to calculate DTI.

 

They won't normally account rent for $3000 a month unless you have written lease contract with cashier check deposit and first month payment. You need to put those into your bank and show the bank statement. Even if you do this, they will account only 75% of rent, but not 100%. If you do not have signed lease with deposits, they assume rent based on their own rent appraisal and account 75% of the value (It may be $1500 in their calculation!). 

 

Above all, you need to show 6 months cash reserve equal to Both homes PITI, i.e. 6 * (new PITI + old PITI ) in your bank (includes liquid assets CD + 401k etc) above the down payment amount! The reserve will not account rent income.

 

With 3% you can not get a home as sellers will reject you. Bank won't give any loan more than 625k with 3.5% FHA. You must have minimum 20%, otherwise do not even think about it. Even with 20% down only one or two bank will give such loans! Some banks insists 35% DTI for 6 month reserve and 12 months reserve for 40% DTI.

 

It is nightmare work for you. My friend went through all these and closed it, but less than 625k loan with 30% down payment! 

 

Best option: Either follow elt1 suggestion or be happy with existing home!

 

Gold Regular Contributor
sheriff
Posts: 2,390
Registered: ‎06-01-2012
0

Re: Would I be eligible to buy a another home ?

[ Edited ]

norcal_home_buy wrote:

Hi All,

 

This is my situation. I live in a home (bought for $750K in 2007 ) , currently appraised for $730K a week back and the outstanding loan amount is $560K. Currently in a conventional loan.

 

I want to buy a bigger home as my family will expand in a year. I want to make that home as my primary residence. Bigger homes in good school districts cost around $1.2M- $1.5M in my area. So my question is would I be able to buy a $1.2M home with around 3% downpayment ? I dont want to sell my current home as my current home will rent for $3000 a month which would cover my current PITI. Is this even possible today ? My credit score is 800+. Household income is $275K, no other debt.

 

Thanks for reading.


This may seem obvious, but have you looked into putting an addition on your current home.  I am estimating you will spend at least the following amounts buying and selling houses: 

                                             $730K house             1.2 mil house

agents commission at 5%          36,500                      

loan orig fee                                                                 12,000

transfers + other closing fees      7,000                        12,000

miscellaneous                              1,000                          2,000

                                                  _______                   _______

totals                                          44,500         +             26,000  =  60,500

 

This would go along way towards an addition at your current address.

Visitor
norcal_home_buy
Posts: 4
Registered: ‎02-22-2013
0

Re: Would I be eligible to buy a another home ?

The point is I am trying not to sell my current home. I am trying a buy another home in a good school district WITHOUT selling my current home. So the $44500 in your math is not relevant. I have 6 months worth of PITI(of both mortgages) but I dont have the 20% down payment. I have about 4% down payment. So has any one tried to work through such a scenario ?


sheriff wrote:

norcal_home_buy wrote:

Hi All,

 

This is my situation. I live in a home (bought for $750K in 2007 ) , currently appraised for $730K a week back and the outstanding loan amount is $560K. Currently in a conventional loan.

 

I want to buy a bigger home as my family will expand in a year. I want to make that home as my primary residence. Bigger homes in good school districts cost around $1.2M- $1.5M in my area. So my question is would I be able to buy a $1.2M home with around 3% downpayment ? I dont want to sell my current home as my current home will rent for $3000 a month which would cover my current PITI. Is this even possible today ? My credit score is 800+. Household income is $275K, no other debt.

 

Thanks for reading.


This may seem obvious, but have you looked into putting an addition on your current home.  I am estimating you will spend at least the following amounts buying and selling houses: 

                                             $730K house             1.2 mil house

agents commission at 5%          36,500                      

loan orig fee                                                                 12,000

transfers + other closing fees      7,000                        12,000

miscellaneous                              1,000                          2,000

                                                  _______                   _______

totals                                          44,500         +             26,000  =  60,500

 

This would go along way told an addition at your current address.


 

Visitor
norcal_home_buy
Posts: 4
Registered: ‎02-22-2013
0

Re: Would I be eligible to buy a another home ?

Valid points. I have 6 months of PITI (for both mortgages without including rent). I have only about 4% down payment on the new house. So how to go about this one ? The thing I am grappling with right now is that I dont ant to sell my current home as I strongly believe it has another $100K rise left in about 2-3 yrs. I may be wrong in my beliefs but as long as rent = PITI on the home, why not try to get into a bigger home ?


Jil wrote:

norcal_home_buy wrote:

Hi All,

 

This is my situation. I live in a home (bought for $750K in 2007 ) , currently appraised for $730K a week back and the outstanding loan amount is $560K. Currently in a conventional loan.

 

I want to buy a bigger home as my family will expand in a year. I want to make that home as my primary residence. Bigger homes in good school districts cost around $1.2M- $1.5M in my area. So my question is would I be able to buy a $1.2M home with around 3% downpayment ? I dont want to sell my current home as my current home will rent for $3000 a month which would cover my current PITI. Is this even possible today ? My credit score is 800+. Household income is $275K, no other debt.

 

Thanks for reading.


I can not exactly say whether you will be eligible for 1.2M home without knowing further details. You may be eligible for some amount and it depends on how much monthly PITI current payment. Bank will account both PITI (new home + old home ) to calculate DTI.

 

They won't normally account rent for $3000 a month unless you have written lease contract with cashier check deposit and first month payment. You need to put those into your bank and show the bank statement. Even if you do this, they will account only 75% of rent, but not 100%. If you do not have signed lease with deposits, they assume rent based on their own rent appraisal and account 75% of the value (It may be $1500 in their calculation!). 

 

Above all, you need to show 6 months cash reserve equal to Both homes PITI, i.e. 6 * (new PITI + old PITI ) in your bank (includes liquid assets CD + 401k etc) above the down payment amount! The reserve will not account rent income.

 

With 3% you can not get a home as sellers will reject you. Bank won't give any loan more than 625k with 3.5% FHA. You must have minimum 20%, otherwise do not even think about it. Even with 20% down only one or two bank will give such loans! Some banks insists 35% DTI for 6 month reserve and 12 months reserve for 40% DTI.

 

It is nightmare work for you. My friend went through all these and closed it, but less than 625k loan with 30% down payment! 

 

Best option: Either follow elt1 suggestion or be happy with existing home!

 


 

Silver Super Contributor
ptiemann
Posts: 1,249
Registered: ‎08-07-2009
0

Re: Would I be eligible to buy a another home ?

I think the real problem is the 4% available down payment. A strong offer includes proof of funds. If the seller sees that you have only 4%, that means, you absolutely rely on the appraisal to come in at full contract price. Even if you waive the appraisal contingency, the seller knows that your offer is weak, sorry, if this is too blunt.

 

If you meant "eligible in the eyes of lenders", that's another story. With your income, you might be ok.

Contributor
Cougar
Posts: 39
Registered: ‎02-16-2013
0

Re: Would I be eligible to buy a another home ?

I'm in your exact position, even down to current home situation, credit score, salary.  Every lender we got preapprovals from told us anything short of 20% down would not be considered in the marketplace. We did find one who offered a 85/15 with two mortgages but that's the lowest down payment we could find, with a 5+% rate on the second.

 

 

Gold Super Contributor
Jil
Posts: 3,174
Registered: ‎10-24-2011
0

Re: Would I be eligible to buy a another home ?


norcal_home_buy wrote:

Valid points. I have 6 months of PITI (for both mortgages without including rent). I have only about 4% down payment on the new house. So how to go about this one ? The thing I am grappling with right now is that I dont ant to sell my current home as I strongly believe it has another $100K rise left in about 2-3 yrs. I may be wrong in my beliefs but as long as rent = PITI on the home, why not try to get into a bigger home ?



why not try to get into a bigger home ? ==> True,but lot of lending restriction to avoid future real estate downfall like 2007/8!  Try to get pre-aprpoval, you will know the results. Choose wellsfargo so they calculate everything and tell you!
This is sellers market as of now! 4% will not work out. As many said, you will be knocked out first by seller at this current market condition. Please visit open house and try to offer, you will be frustrated. Better school district area, higher down payment (more than 20% incliding 100% full cash offers) are common. Better to see yourself and post your reviews here.