Interested in purchasing a home, but have not sold your existing property?

Interested in purchasing a home, but have not sold your existing property? Bridge Loan

 

I’m not an advocate of buying before selling in today’s market unless you understand and are comfortable with the risks involved, but if you insist on going this route, according to Rich Hirsh, from Mortgage Masters, here are Fannie’s guidelines:

 

If you are applying for a conventional loan, Fannie Mae requires that you either have 30 percent equity in your CURRENT residence OR 6 months cash reserves for BOTH homes.

 

 

Home Buying Scenarios

 

#1 – Current Home is SOLD but not CLOSED prior to purchasing other one.

 

   Must qualify for BOTH house payments and have 6 months worth of payment reserves for BOTH homes

UNLESS

   There is an executed purchase contract and all finance contingencies have been cleared on the home you are selling

OR

   Have 30 percent equity in current residence (Appraisal/BPO) PLUS 2 months worth of payment reserves for both homes

 

#2 – Existing Home Converts to Second-Home Status

 

   Must qualify for BOTH house payments

 

AND

 

   Have 6 months worth of payment for BOTH homes

 

OR

   Have 30 percent equity in home being converted to 2nd home

 

(Appraisal /BPO) PLUS 2 months worth of payment reserves on BOTH homes.

 

#3 – Existing Home converts to Rental Property

 

   Must qualify for both house payments AND have 6 months cash reserves for BOTH homes

 

UNLESS

 

   Rental income can be used to offset monthly payment ONLY if home being converted to rental has 30% equity (Appraisal /BPO) AND home is leased AND security deposit has been verified.

 

The bottom line: If you are buying a home without selling your current home, there will always need to be cash reserves after closing in the amount of 6 months PITI unless there is 30 percent equity in their current home. Then you will need 2 months reserves!

 

 

Rich Hirsch Mortgage Master Inc. Phone: 908-410-9066 eFax: 908-325-0018 rhirsch@mortgagemasterinc.com

Joy

Joy Daniels, GRI, ABR, CSP, e-PRO
JOY DANIELS REAL ESTATE GROUP, LTD
2793 Old Post Road, Suite 200
Harrisburg, PA  17110

(717) 695-3177  office - Call TODAY and let me help you find your dream home!

www.joydaniels.com

Joy@JoyDaniels.com - Email TODAY and let me help you find your dream home!

What is your home worth?  Find out at MLS Market Snapshot

  facebook icon   Goolge icon twitter icon  linked in  youtube icon

  

16 commentsJoy Daniels • April 18 2012 05:29PM
Interested in purchasing a home, but have not sold your existing…
share
Interested in purchasing a home, but have not sold your existing property? I’m not an advocate of buying before selling in today’s market unless you understand and are comfortable with the risks involved, but if you insist on going… more