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Best path to take

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Anonymous
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Best path to take

Need advise from you guys.

 

Currently own a home worth about $300k - paid off / no mortgage. We are looking to upgrade to a home that will likely cost around $430k. We earn about $90k pa and the only debt we have is a $425 pm payment on a car. We probably have about $40k liquid cash to use as well. Credit rating should be very good / excellent.

 

Can I get some type of mortgage that will cover the purchase of this new house before it's cashed in? Are there other routes to take that are worth considering? Thanks in advance!

Message 1 of 6
5 REPLIES 5
Anonymous
Not applicable

Re: Best path to take

What do you mean by “before it’s cashed in”? Is that selling your current home?

With only $40,000 towards $430,000, that’s a lot less than the normal 20% down.
If you have the option for a VA loan then it opens a possible path. Or the FHA maximum might be enough for you to do 3% down. Bad thing about FHA IS PMI insurance. I wouldn’t go that route.
A knowledgeable lender could help you. I just closed with a company and loan officer that from application from close took 14 days, this guy is a true professional.
Call Chris Davies at Royal United Mortgage and I’ll bet he can help.
Message 2 of 6
Anonymous
Not applicable

Re: Best path to take

Thanks Sam
What I mean by ‘cashing in’ is selling yes and having this available to put down on the loan.
My thinking is that it should be a short gap between purchase and selling so the end result is a mortgage of just over $100k
Message 3 of 6
homeloanexpert
Established Contributor

Re: Best path to take

Seems like you should apply for a 95% LTV Conventional as long as your DTI under 50%. An FHA 96.5% LTV would be your fall back program if your ratios were stretched beyond the 50% DTI. Then once your home sells, you can do a principle balance reduction and request the PMI be removed. Or if you had to finance using an FHA you could do a refinance. But either way, you certainly have several options.

Branch Manager - Specializing in FHA, VA, USDA, Conventional, Jumbo, Portfolio and Non-QM Loan Products.
Message 4 of 6
Anonymous
Not applicable

Re: Best path to take


@homeloanexpert wrote:

Seems like you should apply for a 95% LTV Conventional as long as your DTI under 50%. An FHA 96.5% LTV would be your fall back program if your ratios were stretched beyond the 50% DTI. Then once your home sells, you can do a principle balance reduction and request the PMI be removed. Or if you had to finance using an FHA you could do a refinance. But either way, you certainly have several options.


If you do the conventional loan/principle reduction route, you would also want to ask the lender to recast your loan. This will reduce any payments and interest owed. You will need to make sure your loan is eligible for recasting before you close. More info: https://www.investopedia.com/terms/m/mortgagerecast.asp

 

Message 5 of 6
Anonymous
Not applicable

Re: Best path to take

Someone stated making a principle payment o remove PMI.
I don’t believe this is possible anymore, I know it’s not.
FHA now carries PMI for the life of the loan
Message 6 of 6
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