Can I buy a home before the sale of my current home is complete?

Although every situation is unique, it is not uncommon for homebuyers to qualify for a mortgage on a new home while still living in their primary residence.Perhaps you are outgrowing your current house, 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 right.If you are in a financial position where you qualify to afford both your current residence and the proposed payment on your new house, then the simple answer is No!Qualifying based on your Debt-to-Income Ratio is one thing, but remember to budget for the additional expenses of maintaining multiple properties. Everything from mortgage payments, increased property taxes and hazard insurance to unexpected repairs should be factored into your final decision.What If I Rent My Current Property?This scenario presents the "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.In that scenario, the lender will typically only count 75% of the monthly rent you are proposing to receive.So if you are going to receive $1000 a month in rent and your current payment is $1500, the lender is going to factor in an additional $750 of monthly liabilities in your overall Debt-to-Income Ratios.Another detail that can present a huge hurdle is the reserve requirement and equity ratio most lenders have. In some cases, if you are going to rent out your current home, you will need to have at least 25% equity in order to offset your payment with the proposed rent you will receive.Without that hefty amount of equity, you will have to qualify to afford BOTH mortgage payments. You will also need some significant cash in the bank.Generally, lenders will require six months reserve on the old property, as well as six month reserves on the new property.For example, if you have a $1500 payment on your old house and are buying a home with a $2000 monthly payment, you will need over $21,000 in the bank.Keep in mind, this reserve requirement 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, and doesn't require a financial calculator to figure out.If you are in this situation, then you will have to sell your current home before buying a new one.If you aren't sure of the value of the home or how your local market is performing, give us a ring and we'll happily refer you to a great real estate agent that is in tune with property values in your neighborhood......As you can tell, purchasing one home while living in another can be a very complicated transaction. Please feel free to contact us anytime so we can review your specific situation and suggest the proper action plan. www.imortgagelending.com

Hi Leah, I'm with a direct lender here in Albuquerque. There are better options than pledged assets available and I would be glad to provide you some advice with no obligation on your part. Please call at your convenience. Thanks! Charlie Sparks, 505-350-3745 (cell) or 505-899-2800 (office). MLO# 195031

Hi Leah! The best place to start would be to discuss this with your mortgage professional who I assume you may already be working with. You would need to qualify in carrying both mortgage payments (PITI) and of course, you would need to find the funds for the down payment on the new property. If you have a 401K, this may be an option to withdraw funds and/or borrow against the 401K. You should always consult a Tax Professional and/or Financial Professional before making these decisions. SO, to answer your question, this is possible in one way or another, but you would need to make sure you can be approved to carry 2 mortgages at the same time! Good Luck!

You can definitely buy a home before the sale of your current home is complete, but there is a lot to consider before doing so. However, if the source of your down payment is the equity in your current residence, you would at least need to close on the sale of the current residence and purchase of the new home simultaneously. Unfortunately, pledging assets that will not actually be used will not work. There are many options available for the source of a down payment. I am a local mortgage broker here in Albuquerque and a Certified Residential Mortgage Specialist (CRMS). I would be happy to discuss your options with you. Feel free to give me a call at 505-323-0724 or via email at gina@accessfundinginc.com. I am available after hours and on weekends. NMLS #222731