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How high can my LTV be in today's markets?

I have a needy situation which must be addressed.  I currently have a 2 br home with a mortgage balance of $320K.  I bought at the top of the market a few years ago and in today's market would likely sell for perhaps $10K less than mortgage balance.   After realtor fees I might need to bring $20K plus to closing should we sell.   Obviously now is not the time to sell...right!   Unfortunately, due to tragic deaths we will soon become the legal guardians of 2 more children, one a teen.We are very happy to assume this role, and we want to provide the best for them.
Our issue in buying a larger home is not affording it, it would be getting past closing.
Our financial situation is solid for day to day, but not for buying a home.   We currently bring in nearly $17K gross monthly and have a minimal $800 monthly debt service aside from our mortgage.   All credit scores are 750 +.   We have about $15K in the bank and our 401K is down to $50K.   Due to our work, we really would like to stay near our current area.   That being said, we would likely be in the $500K + area for a home to meet our needs.    Again....paying a $5K mortgage is not a problem, but closing could be.
Assuming we have to pay $25K to close our current home, that would leave very litlle (after a few months of saving) to offer for down payment, etc.  For 2 years we have been paying down our higher interest debt while keeping our savings at it's current rate.   Because of that, we don't have $100K to put down.   Do I have any options.   I know the days of 80/20 are gone, but is there anything close?   I really just need to get into a larger home as I want to provide these 2 children the very best.
By the way, the trust set up for these children does allow for discretion in use of funds towards their care, but does not allow for any use towards any type of home purchase.   
Thank you in advance.
  • January 30 2009 - Park Hill
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Answers (5)

Royal you have a few options to consider.
you may be able to draw against your 401k or the trust as Rudi mentioned. If you're willing to drop down to the 417k mark you can always look at FHA with only 3.5% down. If you absolutly need to be in the 500k+ range I can do jumbo's with only 10% down without mortgage insurance.

Last thing to concider if you're monthly income is so solid can you support 2 loans comfortably? Perhaps you could move out of your current residence but keep it as a rental to offset the mortgage. That way you're not forced to sell it at a loss.
  • March 12 2010
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illinfann, if the Trust is fairly substancial, I suggest speaking with an independent attorney. You may have other options for relocating in another residence that supports an adequate lifestyle for your newly increased family, that will not be as costly for you. .... Best wishes!!
  • January 30 2009
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You could always try to sell your current home by yourself FSBO. I would suggest you use the money you would pay in Realtor commissions to help the buyer with their closing costs. Especially help them buy down their interest rate. This seller financing assistance should make your home more attractive relative to similar homes for sale. I would advertise it as such a deal. You could then look at either a rent to own (yellow signs on the roadside) or other ads to lock in a deal on a home today while you rebuild your savings and have some down payment and reserves. Or just look at a straight rental.
  • January 30 2009
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Profile picture for HEweddle
I did consider that.  As an architect, I originally purchased the home for that reason, but only to add a family room and 1 more bedroom, while renovating other rooms.   The construction necessary to do this would require us to move out for at least 5-6 months with the extra children, whereas we could have managed with just 3.
  • January 30 2009
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What about renovating your current home?

1. Would the area support a higher value if you turned your 2 bedroom home into a 4 bedroom home?
  • January 30 2009
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