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My wife and I are looking to relocate from Southeast Minnesota to Northern Minnesota (Duluth/Two Harbors area). When we bought the home we are in now, in 2015, we were rushed into a purchase decision because our previous house was already listed and sold in 17 days. We needed the equity cash out as down payment on the new house so had to sell it first. Is there a way to not be forced into this situation? We have $200K equity in our current house. We are cash flow positive almost $5K/month between our jobs and bills. Currently that money (about $70K) goes to a high yield savings where I plan to pay off all student loan debt this fall. We would like to relocate in 2024 (summer/fall) so have the luxury of time to plan this... I make ~150K/yr and have a 820 credit score without considering my wife's income. I have considered buying a second home at a lower price point up north without selling our current home so that I have time to prep and sell existing home without the time pressure. When I do sell I'll have the $200K equity out in cash. I could use that $200K to pay off the mortgage in the smaller temp home. I can eventually sell or rent out the smaller home up north once we find our dream home on the North Shore. I feel like it's all a big catch 22 and the real estate agents and banks have a strangle hold on this process. What have others done?
I have been in your situation. People suggested a “bridge loan” but the rates were pretty high. So we just took a conventional mortgage and bought the new house while we still owned the old one, but paid off the loan in 6 months. We paid 90% of it immediately and completed the loan in 6 months so our mortgage person wouldn’t lose commission. In your case, if you wanted to retain the mortgage, you could simply apply your equity after sale to the new mortgage.
If the market is a little soft, you can sometimes get a contingency offer accepted…meaning your will complete the sale when you get your house sold.
You could sell the house and get a “rent back agreement” as a condition of the sale, so your buyers would have to rent your house back to you for a specific period following closing. That would free up your equity to be able to make a purchase on the next place.
I am in a transitional phase between homes in two states. The "main", or original home in Florida was expected to be a retirement home. Changes in the family structure motivated us to purchase a home in (northern) AZ a few years ago. This will be our retirement home as we have few, if any, remaining ties in Florida, and the climate (political and natural) in Florida getting severely out of whack is making it a far less desirable place to be long-term. Much like you I have nearly zero debt and have appreciable discretionary income as I am still working.
I've already made the leap and purchased a home in Arizona, and I did so at the peak of the market. That said, it's on a 2.75% mortgage and in an area where property values will continue to climb for a long, long time due to the desirability of the area.
I'm on the fence as to when to make the transition. There are some concerns that aren't relevant here, but for the most part I can go anytime I wish. My Florida home will sell easily, even in this economy, as it's in a very desirable area and comps continue to move and sell at a premium.
I can't imagine it being difficult finding the home you want or a nice "starter" home in that market without a lot of effort. The real beauty of this, if you can afford it, is that you'll be able to transition easily over time into your "new" home and area. That's sort of what I've done, spending more and more time in Arizona over the past couple of years. I've now got a good idea of the climate year-round, the community and surrounds as well as being able to take time to get the house the way I want it.
I used to live in SE WI and had friends in Superior. I can't imagine living there year-round, but it is a beautiful place! Good luck!
You can start looking for your new home while living in your current one. Start getting it ready to sell (to be shown). You can sign with a listing agent and ask that the home not be marketed or placed on the MLS until you give them the green light, but have them get it ready to go on the MLS on short notice (pictures taken, etc).
When you find the home you want to buy your agent can inquire if the sellers would accept a contingent offer. If they are not in a hurry that shouldn't be a problem but if they are it helps to make a full price, or even above offer. Their agent won't advise them to accept a contingency unless your house is currently on the market, so your agent can put you live on the MLS just before the offer is made so it will be listed and actively on the market when they are reviewing the offer.
If they accept the offer then the sale of the house you are buying will not commence until your home is sold.
My wife and I are looking to relocate from Southeast Minnesota to Northern Minnesota (Duluth/Two Harbors area). When we bought the home we are in now, in 2015, we were rushed into a purchase decision because our previous house was already listed and sold in 17 days. We needed the equity cash out as down payment on the new house so had to sell it first. Is there a way to not be forced into this situation? We have $200K equity in our current house. We are cash flow positive almost $5K/month between our jobs and bills. Currently that money (about $70K) goes to a high yield savings where I plan to pay off all student loan debt this fall. We would like to relocate in 2024 (summer/fall) so have the luxury of time to plan this... I make ~150K/yr and have a 820 credit score without considering my wife's income. I have considered buying a second home at a lower price point up north without selling our current home so that I have time to prep and sell existing home without the time pressure. When I do sell I'll have the $200K equity out in cash. I could use that $200K to pay off the mortgage in the smaller temp home. I can eventually sell or rent out the smaller home up north once we find our dream home on the North Shore. I feel like it's all a big catch 22 and the real estate agents and banks have a strangle hold on this process. What have others done?
I done something similar on several occasions. Generally, this is how it goes. Take out a Home Equity Line of Credit (HELOC) on your existing house. Costs are minimal for doing this and you are only charged interest on the amount of money that you actually TAKE from the loan from the date you take it. You can then repay that loan in total or partially at any time you want. Again, you only pay interest on the amount you have actually taken from the loan and only for the time you have it.
Then, once you've got your sizeable HELOC approved plus some substantial savings you have on hand, you can then buy your next house for CASH. Then, once you've moved into the new house and had time to get the old house ready for sale, you can put the old house on the market for sale. When it sells, you will pay off the HELOC with the proceeds.
However, in your case, there are potentially a couple of problems. First is the student loan debt that you have. I don't know how much this is or how that compares with the other financial matters in this case, but it might be a substantial factor.
The second major concern is the existing mortgage that you have on your house. Again, I don't know the amount of that or how it compares (size wise) to the other costs, but it's definitely a factor. Also, I don't know what other debts or expenses you may have. Depending on how much savings you have, you might be better served to wait another couple of year and continue saving your money and paying down your debts.
As for selling and moving into a lower priced house for a short time, I'm not so sure that's a good idea. With all the loan costs and moving costs, it might not save any money at all... not to mention the fact that you likely wouldn't be nearly as happy living in the considerably less expensive house.
In summary, with the incomes that you and your wife have, I think that your best play is to simply start paying down debt ASAP and resist the urge to take on more debt. I think this is the quickest way to get the house you really want and to be in a better overall financial position at the same time.
I (have) done something similar on several occasions. Generally, this is how it goes. Take out a Home Equity Line of Credit (HELOC) on your existing house. Costs are minimal for doing this and you are only charged interest on the amount of money that you actually TAKE from the loan from the date you take it. You can then repay that loan in total or partially at any time you want. Again, you only pay interest on the amount you have actually taken from the loan and only for the time you have it.
Just wanted to correct a grammatical mistake in my post above. I hate it when someone says "I done something". It just sounds so bad, yet here I did the same thing in my post above. I think I simply forgot to put the word "have" in front of the word "done" in which case it was simply a case of leaving out a word that I intended to write.
My wife and I are looking to relocate from Southeast Minnesota to Northern Minnesota (Duluth/Two Harbors area). When we bought the home we are in now, in 2015, we were rushed into a purchase decision because our previous house was already listed and sold in 17 days. We needed the equity cash out as down payment on the new house so had to sell it first. Is there a way to not be forced into this situation? We have $200K equity in our current house. We are cash flow positive almost $5K/month between our jobs and bills. Currently that money (about $70K) goes to a high yield savings where I plan to pay off all student loan debt this fall. We would like to relocate in 2024 (summer/fall) so have the luxury of time to plan this... I make ~150K/yr and have a 820 credit score without considering my wife's income. I have considered buying a second home at a lower price point up north without selling our current home so that I have time to prep and sell existing home without the time pressure. When I do sell I'll have the $200K equity out in cash. I could use that $200K to pay off the mortgage in the smaller temp home. I can eventually sell or rent out the smaller home up north once we find our dream home on the North Shore. I feel like it's all a big catch 22 and the real estate agents and banks have a strangle hold on this process. What have others done?
Just wanted to correct a grammatical mistake in my post above. I hate it when someone says "I done something". It just sounds so bad, yet here I did the same thing in my post above. I think I simply forgot to put the word "have" in front of the word "done" in which case it was simply a case of leaving out a word that I intended to write.
Just wanted to clear that up. Now I feel better.
Don't forget that in some parts of the deep South, adding have done is merely optional in normal conversation. Just like 2 "yewts" in the movie, My Cousin Vinnie with Joe Pesci.
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