Very Short-term mortgage alternative?

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amother

Fri, Dec 09 2022, 12:35 am

We are looking to sell our house and move. Our mortgage on the current house is paid off B"H, but we would have a hard time qualifying for a mortgage for a new house based on income. We have about 10% of the funds ready that we can put as a down payment to go into contract. But without taking a mortgage, we would have to come up with the rest of the money by closing date. Originally, we planned to sell first, or buy with a contingency that we would have to find a buyer for our house for the sale to go through. But the area we are looking into is a hot market, and desirable houses go fast. I saw a house I like, but the seller is not going to wait until I sell my house first. So we would need to come up with the money or get some sort of the equivalent of a mortgage loan for several months, until we get the funds from selling our house. How do I do that? Bank loans carry very high interest rate. Do I refinance on my current home, and get a home equity loan? Can someone please explain to me how that works and if this is my best option? I am not so financially savvy and trying to learn.

amother

Pumpkin

Fri, Dec 09 2022, 3:19 am

Where are you located?
There are Jewish interest free loans that may be applicable

amother

Yellow

Fri, Dec 09 2022, 6:40 am

It's called a bridge loan.

Contact a mortgage company or bank.

They do them all the time

https://www.investopedia.com/t.....n.asp

amother

Ivory

Fri, Dec 09 2022, 7:23 am

I believe you can sell with the contingency to not close until you are under contract somewhere else. Or with a flexible move out date plus rent back.

amother

Fri, Dec 09 2022, 10:16 am

amother Pumpkin wrote:

Where are you located?
There are Jewish interest free loans that may be applicable

Brooklyn, NY

amother

Black

Fri, Dec 09 2022, 10:17 am

A gemach

amother

Fri, Dec 09 2022, 10:17 am

amother Yellow wrote:

It's called a bridge loan.

Contact a mortgage company or bank.

They do them all the time

https://www.investopedia.com/t.....n.asp

Thank you. Is the interest rate very high for such short-term bridge loan? I am hoping my house would sell fast B"H, but there is obviously no way of knowing.

amother

Fri, Dec 09 2022, 10:19 am

amother Black wrote:

A gemach

Are there Gemach for such large amounts of money? We are talking about buying a house.

amother

Fri, Dec 09 2022, 10:21 am

amother Ivory wrote:

I believe you can sell with the contingency to not close until you are under contract somewhere else. Or with a flexible move out date plus rent back.

This is correct but I have the opposite problem: I may be in the situation of buying before selling, and looking for a way to fund it that is not based on income. We thankfully do not have debt, and our credit score is good.

nicole81

Fri, Dec 09 2022, 12:48 pm

Can you find a tenant until the sale goes through? Or someone willing to rent to buy?

Eta: this won't help with funds but it may allow you to finance 90% until you can sell and then refinance the new place.

groovy1224

Fri, Dec 09 2022, 12:51 pm

amother OP wrote:

Thank you. Is the interest rate very high for such short-term bridge loan? I am hoping my house would sell fast B"H, but there is obviously no way of knowing.

Yes, the rates on bridge loans are pretty high. If the seller won't sell to you with a contingency, it may be your only option though.

amother

Cornsilk

Fri, Dec 09 2022, 1:39 pm

The best option would be to sell your current house with an option to rent back for a specific period.

You would theoretically have at least 60 days to find your new home. 30 Days for escrow to close is common plus 30 days to rent although the rental period is of course negotiable between you and the seller. You would pay them rent during this period.

If worse comes to worse you could rent an Air BnB or short term rental. Wouldn't be ideal but it would be short term.

In the meantime you should consult with a good mortgage broker who can let you know exactly how much house you can afford in terms of mortgage as well as probably providing assistance in terms of how you would structure the finances.

An experience realtor would also be helpful in terms of negotiating a deal for the sale of the house with the rent back option plus buying a house in terms of how you will be getting the necessary funds for the downpayment and mortgage.

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