September 19, 2021

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How to buy a new house while selling your old one | Real Estate

Just make sure to stick to your plan to repay the loan after the old house is sold and avoid the temptation to use the money on other things. The failure of a loan from a 401 (k) account can trigger taxes and penalties.

Low down payment mortgage

One option is to take out a conventional, low down payment mortgage to buy your next home. When the old home is sold, apply the proceeds to your new home and have your mortgage rewritten.

When the loan is rewritten, the lender applies the lump sum payment to the lender and executes the Depreciation planthat shows how much of each payment is used for interest and how much is used for debt reduction. Recasting the mortgage lowers your monthly payment and is less costly and easier than refinancing a mortgage, says Smith.

But plan ahead. Not all lenders offer mortgage recast. And this service is not available for federally supported loans like FHA, USDA, or VA loans.

A new way to buy and sell

A variety of newer companies such as Homeward, Knock, Opendoor, Orchard, Ribbon, and others are reshaping the way they buy and sell homes. Their services vary, but generally they offer financing so you can get a cash offer on your next home before closing the sale of your existing home – and avoiding paying two mortgages at the same time.