Selling Your Home – Frequently Asked Questions

by Ashley Anderson
NMLS#217467

Do I Need To Sell My Home Before I Can Qualify For A New Mortgage On Another Property?
Although every situation is unique, it is not uncommon for homebuyers to qualify for a mortgage on a new home while still owning their current residence.  Perhaps you are outgrowing your current home or have been forced to relocate due to a job transfer?  Regardless of the motivation for keeping one property while purchasing another, let’s address this question with the mortgage approval in mind:

So, Do I Have To Sell?
Yes, No, Maybe,  It depends.

Welcome to the wonderful world of mortgage lending.  Only in this industry can one simple question elicit four answers…and all of them may be correct.

If you are in a financial position where you qualify with both your current residence and the proposed payment on the new house, then the simple answer is NO, you do not need to sell your home to purchase another.

What If I Rent My Current Property?
This scenario presents “maybe” and the “it depends” answers to the question.

If you’re not quite qualified to carry both mortgages, you may have to rent the other property in order to offset the mortgage payment.  The lender will only count 75% of the monthly rent you are proposing to receive to offset your current mortgage.  For example:  $1000 month rent at 75% would be $750 and if your monthly payment is $1500 then the lender is going to count an additional $750 in your debt to income ratio.  Another detail, in some cases, if you are going to rent your current home, you will need at least 25% equity in order to offset your monthly payment with the proposed rent you will receive.   Without this equity, you may need to qualify to afford BOTH mortgage payments.  You will also need cash reserves after closing and depending on your situation the lender could require 6 months reserves on the old property and 6 months reserves on the new property.  In some cases, these reserve funds can be in a retirement account or 401K.  Keep in mind the reserve requirements is incremental to your down payment on the new property.

What If I Can’t Qualify Based On Both Mortgage Payments?

This answer is pretty straightforward.  If you are in this situation, then you will have to sell your current home before buying a new one.  If you are unsure of the value of your home or how your local market is preforming, get with Sage Wilson Property Group as they are in tune with property values in your neighborhood.

As you can tell, purchasing one home while living in another requires financial direction from your lender, so please feel free to contact me anytime so we can review your specific situation and suggest the proper action plan.

Ashley Austin Anderson | Mortgage Loan Originator

ashley@ashleyaustinanderson.com | Cell: 512-413-1332 | Website: ashleyaustinanderson.com

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The data relating to real estate for sale on this web site comes in part from the Austin/Central Texas Realty Information Service (ACTRIS).

 

Disclaimer: All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing broker(s) nor Keller Williams Austin Northwest shall be responsible for any typographical errors, misinformation, misprints and shall be held totally harmless.