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Is there a lender who will pre-qualify a loan before the payoff of debt from sale of current home?

My income has been cut in half due to retirement.  We have about 60K credit card debt from medical and misc expenses that we want to pay off by using the equity from the sale of our current home and then buy a smaller, less expensive home.  I would like to get pre-qualified for a new loan contingent on the sale of our current home and the pay off of most of that debt.  How do I find a lender who will work with me on this?  I previously tried to get a refi with cash out to pay off the debt but that loan was denied due to debt vs income.  My credit score is in the 760's or 770's.
  • April 07 2013 - Hurst
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Answers (2)

Best Answer

I do this all of the time.
You are pre-approved with the 'conditions' that the current home sells and debt is paid. (we just simulate that in the loan software)
Give me a call if you would like to discuss. I am available most  nights/weekends.
Click on my profile for contact info.

Tom Burris
Service First Mortgage
  • April 07 2013
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A cash out rarely solves the problem if your income has reduced and usually only makes it worse. 

However, the smart thing to do is what you are stating -- to take your equity to pay off debt and DOWNSIZE. 

So YES, you can talk to a lender about qualifying by taking your profit from the sale and paying off debt and retaining a down payment.  You would still have to qualify for a loan with your current income. 

Check with 2-3 lenders, compare fees, rates, programs and then select the one that you feel most confident to get the job done.  And dont over look asking friends/family for a referral.  Sometimes these turn out to be the best lenders/agents with a proven satisfactory rating. 

Good luck!
  • April 07 2013
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