Move up buyer

[IrvineLifer]

Hi, we're what you would call move-up buyers. The problem is we would have to sell first in order to qualify for mortgage on the new purchase. With 2 little ones I'm not really looking forward to crashing with relatives an moving twice. Someone suggested to me buying on contingency or rent back. How likely is that in the current Irvine RE market where there is a shortage of homes for sale? Does anyone have any advice on buying and selling at the same time? Any advice is greatly appreciated.

 

[usctrojancpa]

Hi, we're what you would call move-up buyers. The problem is we would have to sell first in order to qualify for mortgage on the new purchase. With 2 little ones I'm not really looking forward to crashing with relatives an moving twice. Someone suggested to me buying on contingency or rent back. How likely is that in the current Irvine RE market where there is a shortage of homes for sale? Does anyone have any advice on buying and selling at the same time? Any advice is greatly appreciated.

With a lack of inventory and high volume of demand it will be difficult for contingent buyer to compete against a non-contingent buyer.  One option would be that you would make the requirement that the buyer of your home provide you a rent-back period where you would have enough time to find a replacement home (or make the closing contingent on you finding a replacement property).  Do you have at least 30% equity in your current home?  Are you looking to buy a new home or a re-sale home?  There are a few different ways you can make things happen.

 

[IrvineLifer]

Yes, we have more than 30% equity in our current home. We're looking at both new home and re-sale in the 500-650K range.  With new home though we're probably looking more in the mid 500 range due to Mello Roos.

 

[irvinehomeshopper]

I would highly endorse California Pacific Homes. Due to smart, innovative and efficient floor plans Cal Pac's resale prices are consistently higher than other builders. Check with Irvine Realtor or USC Trojan for facts and figures. they can tell you specific value ratio compared with other ABC builders. From previous threads Cal Pac's debut project will be next to the Million Dollar neighborhood.

 

[usctrojancpa]

Yes, we have more than 30% equity in our current home. We're looking at both new home and re-sale in the 500-650K range.  With new home though we're probably looking more in the mid 500 range due to Mello Roos.

Do you need to sell the current home to raise liquid funds for the down payment of the new home? Because if you have over 30% equity in your home, most lenders will allow you to obtain credit for rental income on your current home if you have a lease signed & security check deposited before you close on your new home.  The lender will take 75% of the rent amount (assuming it is around market) and then deduct expenses related to your current home to determine if it will be a positive or negative to your debt-to-income %. 

 

[irvinerealtor]

Yes, we have more than 30% equity in our current home. We're looking at both new home and re-sale in the 500-650K range.  With new home though we're probably looking more in the mid 500 range due to Mello Roos.

This home will be on the market in just a short while.  www.6NightBloom.com  (it's in the process of getting staged/photos/detailed).
This is a Cal Pac home (irvinehomeshopper-approved) in the Mericort tract.
Will be range-priced from $575K to $600K when it goes to market.

If you'd like to take a look before it hits the MLS, please PM/call/email me for an appointment.

Thank you,
-IrvineRealtor

 

[cubiczirconia]

Hi, we're what you would call move-up buyers. The problem is we would have to sell first in order to qualify for mortgage on the new purchase. With 2 little ones I'm not really looking forward to crashing with relatives an moving twice. Someone suggested to me buying on contingency or rent back. How likely is that in the current Irvine RE market where there is a shortage of homes for sale? Does anyone have any advice on buying and selling at the same time? Any advice is greatly appreciated.

Ideally buying time passed last year. Selling window has just opened. That's strictly my opinion, and just like many others, we missed the buying window too. Our problem is mainly two children, two jobs, and IHS approved house that is perfect, but could use another 100 sf family area. I am not sure if we want to spend so much money in moving expenses if it's just for some more space..

Good luck

 

[davenlei]

Hi, we're what you would call move-up buyers. The problem is we would have to sell first in order to qualify for mortgage on the new purchase. With 2 little ones I'm not really looking forward to crashing with relatives an moving twice. Someone suggested to me buying on contingency or rent back. How likely is that in the current Irvine RE market where there is a shortage of homes for sale? Does anyone have any advice on buying and selling at the same time? Any advice is greatly appreciated.

About 3.5 years ago we were move up buyers as well.  We were tossing around the idea of keeping and renting out our existing home (in Irvine and zoned for Uni High) or selling it and using all the equity to buy a much larger/nicer home and have a mortgage payment just a little more than what we had on the existing home.
So, after going through the process of working out the required rent price to be cash flow neutral/positive and looking at potential renters (which we found several good prospects), we ended up selling our house first (took about a month to find the right buyer in 2009), banking the money and then spending about three months to find the house we really wanted in an area we really liked.  We decided it was too much hassle to go through the extra financing hoops for the new house by having to show rent income, and all the extra 'proof' they wanted (remember this was during the credit freeze period) for the old home.  We also wanted to make sure our worst case scenario carry costs (no renter for a few months and/or a major repair) would not have buried us financially.
We also discovered it was MUCH easier to get our offers for a new home seriously looked at if we did not have a contingency to sell our old home first.

By the way, I used USCTrojan and SGIP for the Realtor representation and purchase loan and they were a breeze to work with and made my buying experience much less stressful.

 

[woodburyowner]

Do you need to sell the current home to raise liquid funds for the down payment of the new home? Because if you have over 30% equity in your home, most lenders will allow you to obtain credit for rental income on your current home if you have a lease signed & security check deposited before you close on your new home.  The lender will take 75% of the rent amount (assuming it is around market) and then deduct expenses related to your current home to determine if it will be a positive or negative to your debt-to-income %. 

Is this a general rule or exception?  For my original lender (and both refi lenders), I would have to show 2 years of tax returns with my rental in order to use the 75% rental amount as credit to my DTI ratio.  Equity in rental was not a consideration.  Obviously, this would not work for a move-up buyer.  This was all in 2012.

 

[IrvineLifer]

That is the dilemma we're facing. We need to sell the current home to raise liquid funds for down payment on the new home. We already own an investment property that we're completely upside down on and cannot sell. We've been told by different lenders that we need 2 years of tax return showing the rental income for it to show cash flow. Unfortunately we only have one year (once I file our tax return this year), so we cannot use the rental income.
I'm guessing our best bet is going to be suck it up, sell the current home first and then look for a new home. 
Thank you all for your feedback! I really appreciate it.

 

[usctrojancpa]

Do you need to sell the current home to raise liquid funds for the down payment of the new home? Because if you have over 30% equity in your home, most lenders will allow you to obtain credit for rental income on your current home if you have a lease signed & security check deposited before you close on your new home.  The lender will take 75% of the rent amount (assuming it is around market) and then deduct expenses related to your current home to determine if it will be a positive or negative to your debt-to-income %. 

Is this a general rule or exception?  For my original lender (and both refi lenders), I would have to show 2 years of tax returns with my rental in order to use the 75% rental amount as credit to my DTI ratio.  Equity in rental was not a consideration.  Obviously, this would not work for a move-up buyer.  This was all in 2012.

From my understanding (I'll let SGIP verify) is that if you have enough equity in the current home that you live (either 25% or 30%) then the lender will give you 75% of the credit for the rental rate that you obtain from a tenant minus your expenses for the property prior to closing on your new purchase loan and without having the property shown as a rental property on schedule E of your tax returns.  It's a general rule.

 

[usctrojancpa]

That is the dilemma we're facing. We need to sell the current home to raise liquid funds for down payment on the new home. We already own an investment property that we're completely upside down on and cannot sell. We've been told by different lenders that we need 2 years of tax return showing the rental income for it to show cash flow. Unfortunately we only have one year (once I file our tax return this year), so we cannot use the rental income.
I'm guessing our best bet is going to be suck it up, sell the current home first and then look for a new home. 
Thank you all for your feedback! I really appreciate it.

Yeah, things are way different if you have a property that doesn't have enough equity or that is underwater.  The lender will assume that the borrower is going to try to do a bait and switch on them (you buy a new home and toss the underwater property back to the other lender).  It's a strong seller's market out there now so you should not have any problem selling your property if it is priced near comps and shows well.