Buying A Home Non-Contingent On The Sale of My Current Home

February 15th, 2020

open house sign

I often get asked to get a potential buyer pre-approved to buy a new home, without the mortgage being contingent on the sale of the current home that they own. While this is possible, it is difficult.

 

GETTING THE CASH FOR THE DOWN PAYMENT ON YOUR NEXT HOUSE

First, you have to have the cash for the down payment and closing costs for the new home without the benefit of the sale of the current home. Then you would have to be able to qualify to carry the debt of both mortgages at the same time.

 

If you do not have the cash on hand without the sale of your current home, you could consider getting a bridge loan or a home equity loan if you have sufficient equity to do so. A bridge loan is designed to “bridge” the gap between the time it takes to sell the home and the time it takes to buy a home. A home equity loan is a loan against the current property in the form of an equity. A lender will usually want you to have 20% equity left in the current home you own. After giving you the equity loan or bridge loan, they will not lend you 100% of the value of the home. You would have to be able to qualify to carry the debt of both mortgages, and the bridge loan payment or home equity loan payment, all at the same time.

 

Maybe you can get a gift from family instead of needing to get a bridge loan or a home equity loan. That solves where you would get the cash for the down payment, but even then, you would still have to qualify to carry the debt of both the mortgage on your current home and the mortgage on the new home at the same time.

 

MOVE TWICE?

While it is not a pleasant option, some people simply need to consider a “double move”. This is when you sell your current home, move out, and find temporary housing until you can find something new to buy. While it is difficult to move twice, many sellers will not consider a contingent offer (which would allow you to move only once) and you may have no choice. Having your home already sold and having your cash in hand makes you a more attractive buyer with a much better chance of getting your offer accepted.

 

OTHER OPTIONS

You could consider selling your home with a “Home Of Choice” contingency, or a 60-day “rent back” that allows you to stay in your home after having gone to settlement. Your buyer becomes the owner and your landlord, giving you time to search for a new home after selling your home to them. But there is still the risk that you won’t find a new home to buy during your rent back period, and will still be forced to double move.

 

To get your mortgage questions answered when you have a home to sell, please call or email me.

Brian Martucci is a loan officer for Capital Bank Home Loans, a division of Capital Bank, N.A. He has been in the mortgage industry since 1986 and has served in a number of roles, including loan processor, loan officer, mortgage broker, branch manager, and vice president. Brian Martucci – NMLS# 185421. His opinions do not necessarily reflect the opinions and beliefs of Capital Bank Home Loans or Capital Bank. Capital Bank, N.A.- NMLS# 401599. Click here for the Capital Bank, N.A. “Privacy Policy”.​

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