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Intro and a few questions
Hi, I usually post on thebump but lately I've been lurking here.
I live in a coop with my parents, SO and son. It's a 2 bedroom and I want a big family, so it's starting to feel crowded.
We are still saving so we won't buy just yet. But when the time comes, I would have to sell first, in order to buy, correct? So I could use the money from selling the coop for a down payment for a new house? Also, how would the mortgages work, like what happens to my current mortgage if I plan on selling? Does it transfer over to the new house I want to buy? Will I have 2 mortgages to pay?
When I do sell, is it a better idea to move out and leave the coop empty (without clutter) or stay there while trying to sell? Some people have suggested that we move out to a rented apartment until the coop sells because an empty coop would be more pleasing than a cluttered one, do you guys agree?
I'm sorry if my questions seem stupid, but I'm new and trying to learn from you resourceful ladies!
Re: Intro and a few questions
The vast majority of modern mortgages (I dare say, all) have a 'Due on Sale' clause. This means when you sell the property, the loan must be paid in full. So your current mortgage on your current property would be paid off through closing.
When you purchase a new property, you would have a completely new mortgage, secured by the new property.
It is very important that your property show well when it is on the market, especially if there is any competition. If you cannot keep the property presentable, and can afford to, consider moving out while on the market. The big variable is that you have no idea how long you will be on the market. If you can't move out, start packing before you put the house on the market. Pack up everything you can, and even more.
Good luck!
Lighthouse State Beach, Santa Cruz.
Oh! And check with your co-op regarding the rules about putting the house on the market and leaving the unit vacant. Any property with an HOA or Board potentially has rules about selling and vacancy.
Good luck!
Lighthouse State Beach, Santa Cruz.
Thanks! So does this mean that when I sell, the money made through the sale will cover the cost of the current mortgage? Of course, hoping that it sells at a good price, well enough to cover the balance of the remaining mortgage, and hopefully have some left over for down payment.
Also, will it negatively affect me having a balance on my current mortgage when I go to the bank to ask for a new mortgage on a new property? Meaning will it count against me having good credit? TIA!
ETA: corrected wrong word
The first bolded statement: that's hard to tell. You and your realtor (if you get one) will have to decide what market value is. That is unrelated to your mortgage balance. Lets say you sell for $100,000 and owe $80,000. Things that come out of the $100,000 - realtor fees usually 6% ($6,000), possibly closing costs for the buyer 3% ($3,000), possibly property taxes for 6 mo- 1 year. <- all those things really depend on the market conditions and what you and the buyers decide. So you have $9,000 in expenses. $100,000-9,000- 80,000 (mortgage balance) = $11,000 to walk away with. This $11,000 can be put on the purchase of your new home if you choose to do that.
On the other hand (this is what's happening fairly often if you read this and other boards): Say your house is only worth $80,000 and your mortgage is $80,000. You'd need to bring money to closing for the realtor's fees ($4800) and buyers closing costs $2,400 which totals $7,200 that you'd be responsible for.
When we sold this is the timeline that happened: Received offer from buyer. We went out and found a house to purchase about a week later. We made the offer on the new house contingent on the close on the sale of our old house. This protected us incase our buyers fell through. We would not be responsible for going through with the purchase. We went and talked to lenders about a new mortgage and got approved. We closed on the sale of the old house (paid off old mortgage and received a check at closing for us) and a few days later the sale of the new house (paid our downpayment and officially had a new mortgage). Our buyers did not want to move in for a few weeks and allowed us to stay there in between.
We qualified for the new mortgage and the old mortgage both but our lender required us to send him the closing documents from the sale of the old house and how much cash we'd get at the end of it. This meant he knew we were selling and qualified us knowing that the old mortgage payment would be gone.
Sorry this is so long but I hope it helps!
thanks. this did help alot. so it really could go either way. I'm hoping something's left over if we sell for a down payment on a new house. Either ways, we'll have to continue to save lol.