Rental Property Investor · Hagerstown, MD · Member since 2018 · 26 posts · 3 votes
Hey friends! We bought our first home 5 years ago, slowly fixed it up and are ready to sell soon! We have about $100k equity in it, based on a recent appraisal. It is not yet on the market.
We found a home that I think could make another really great slow flip opportunity, but trying to figure out the logistics of buying/selling at the same time.
We would not qualify for financing to carry both mortgages simultaneously. If we make an offer contingent on selling, that the seller accepts (they are motivated so there’s a good chance!), Will the bank still factor in our current mortgage as existing debt?
Any other suggestions to make this work?
Current home worth $200k. We have $100k left on mortgage.
Would hope to get new house for about $325k.
Max qualification without current mortgage factored in — $375k.
Potential to house back/rent the basement for new home, too. Approx. $1k/monthly rent. Not sure if that can factor into things to help, also?
Real Estate Agent · Salt Lake City, UT · Member since 2015 · 183 posts · 159 votes
7y
People do subject to sale all the time without being able to carry both loans, that's what the clause is for. As long as you have the subject to sale written in your contract you'll be fine, the mortgage company will only care about your back-end DTI at the time of funding and recording. Worst case, depending on how bad you want the house, you could get an interest only bridge loan from a private lender then refinance as soon as you get your first house sold. From what I see most of the time it's the sellers that you have to worry about. I've seen as many as 4 or 5 buyers' offers fall out because of the subject to sale so depending on your market some sellers might make you take it out or they won't entertain your offer. Just make sure you have a competent agent who can negotiate the subject to sale well with appropriate deadlines so you don't lose your earnest money in case you can't sell your first home.....Side note, we tell our clients to NEVER put down any hard earnest money unless they are desperate. Hope that helps, best of luck to you!!