Old Home/New Home in Hot Market - Contingency or Wing It?

We're wanting to sell our current home (across the street from Mr. Junkyard) and it's pretty much ready to go. 

We've found a home we really like in a neighborhood we really like without any of the worries of Mr. Junkyard happening again. It's a step up in price, for sure. We'd need about $15,000 more in our pockets to clear 20% down. 

However, my new lender, Alliant CU, allows sub 20% down payments without PMI. 

Has anyone ever been faced with missing out on a good deal of a house versus not putting 20% down and NOT doing a contigency offer (not having current home sold prior to new home move in?)

My realtor is confident our house would sell quick, even at an increased priced to cover our costs, but I'm hesitant. I think it'd be easier to rent, but more hassel. 

Can you swing two mortgage payments? How long can you do it? How long does the average sale take in your neighborhood for your type of house?

With the information I have now, I'd put your house for sale ASAP and put in a contingent offer on the new house. If you could swing two payments, put in a normal offer. 

pheller said:

 

Has anyone ever been faced with missing out on a good deal of a house

It won't be the last good deal of a house around. 

We had that same concern recently and decided to deal with the two house payments and avoid contingency.  The market is very hot here (Nashville area) and competitive,  so the less complications the better.

I wouldn't put in an offer without the contingency unless I was ok with paying the mortgage on both homes at the same time. If you are in a position to do that, then offer away.

If you cannot swing both mortgage payments at the same time, just think how would you feel if you got an offer on your existing home and later found out it was not in earnest as it really was a contingent offer without the official contingency and it fell through? Golden rule applies.

I've paid mortgages on two houses before and it wasn't bad, but we also were buying way under our means and selling a house that was way under our means. Are you prepared and able to make two mortgage payments? For months? For a year? At times that can be the best decision for you, from a mental health standpoint. But only if it is not a serious strain financially. Ie, having to skip out on eating out from time to time, OK. Having to choose between going to the doctor or eating or making the house payments - not OK.

If it would be a strain, then make the offer contingent. If you don't get the house, well, as mtn says, there are more houses out there.

Will your lender actually lend you on two houses at the same time? 

That's a good point. My pre-approval might contigent contigent haha. 

Our lender required six months cash reserves to lend on the second house.

Put 3% down then pay down the loan enough  to ditch pmi after the old house sells.  Keep the reserves for carrying costs and unknowns while owning 2 homes.

My friend bought a house based on his old place having a purchase and sales agreement signed.  Then it fell thru.  Then the next two fell thru too, each at a lower price.  He ended up paying two mortgages for a good long time until his 1st house finally sold for substantially less than the original price.

It nearly killed him financially and took him years to dig back out.  No way would I buy another house without my first one being sold.

In reply to dculberson :

That’s what I did when I bought this place. Made two mortgage payments, for a while.  Then I got a bridge loan and three weeks later my old place sold. So the cost of the bridge loan was more than 4 months payments would have been.  

Oh well, live and learn. Just realize that you can make both mortgage payments or get a bridge loan.  

Thanks all.

We've decided against trying to carry two loans, despite our lender giving approval. 

We'll hold off on such action unless it is literally a 100% perfect home. 

John Welsh said:

Will your lender actually lend you on two houses at the same time? 

Depends on your credit and equity positions.  You can also get a bridge loan.  Some full service real estate companies will buy your house outright. 

I carried 2 mortgages for a year.  AirBnB guests paid the entire mortgage on the 2nd house. 

It wasn’t hard.