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How to go about getting qualified for a new loan to buy better home before I sell my current home?

Since my family is getting bigger, I am considering to buy bigger/better home than the current home, and I am hoping to buy the new home before I sell the current one to eliminate the stress of moving out to temp house - selling old - buy new home - move in...
But considering the current lending market being super tight, is this even possible? How much should I save in order to be qualified in such condition? I still have $200K loan on my current condo (not underwater) and want to buy $400K home.

Any tips are welcome! (Oh and uh, of couse i am not thinking about buy&bail :p)

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September 29 2012 - Bellevue
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Answers (5)

Best Answer
If you had a good experience with your prior lender, reaching out to them is a great first step.  Alternatively, get a lender recommendation from a trusted friend or your real estate broker.  

Loan programs run a full spectrum, but you will qualify for the best rate if you can demonstrate your ability to make sizable down payment (20% is ideal as it allows you to avoid paying private mortgage insurance or PMI), and to have enough reserves in savings to cover mortgage payments for 2 or more months.  That said, there are numerous programs available to buyers with less money to put down that are still have competitive rates.  

When you find a lender you want to work with - a 15 minute conversation and completion of an online (or paper form) application is all you need to get started.  

Good luck!
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September 29 2012
You will need to qualify for the new loan with both housing payments.

If you have equity in your condo one strategy might be to put 5 or 10% down on your new purchase. This will require Mortgage Insurance but, when you sell your condo you could use the equity from your sale to pay down the new loan enough to have the mortgage insurance removed.

Another strategy might be to only put 5% or 10%  down and ask for a seller credit to pay an upfront mortgage insurance premium (no monthly cost).

You should sit down with a mortgage professional and work out some different options based on your specific situation. If you still know, like and trust your previous mortgage adviser I would reach out to them as suggested.

If not, I am in Bellevue and would be happy to help you with options and planning. Feel free to look me up on Zillow and LinkedIn for testimonials.

Best of luck,

Doug 
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September 30 2012
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Thanks everyone for the advice!

It seems I prob. should save about $125K ($100K for 20% down payment of $400K house, plus $25K for 6 months worth of loan payment for both loans) to be qualified with the competitive rates.

I wanted to have a ball park figure for my saving goal in this market with this specific scenario so this will do! Thanks again.
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September 29 2012
You would have to qualify for both payments including taxes and homeowners besides your current debt. Most lenders will require six months reserves equal to both home payments. Talk with your local lender to see what your ratios are.  
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September 29 2012
Step #1 in buying any home is ALWAYS the same step.

#STEP 1 = speak to a lender, banker, mortgage broker or all three to see if you can borrow money.

#STEP 2 = find a good Realtor to help after step 1.

You will probably have to get an offer on you house before you can move to placing an offer on another house and a good experienced Realtor is what you need to have on your side helping you.

Tim
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September 29 2012
 
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