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Considering Buying A New Home But Current House Is Not On Market Yet. How To Use Equity For Downpayment?


Our current house is assessed at $655K, and we own $140K on it. (Potential sale profit of $500K) How is the best way to get the maximum amount for an immediate down payment (the house we like will sell FAST!) without having already sold our current house? Or are we out of luck? Our existing house should sell quickly when it’s ready to go on the market, so we should be in a position repay a loan or HELOC within a few months. We also have retirement plans from which we could also consider borrowing.

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8 Responses to “Considering Buying A New Home But Current House Is Not On Market Yet. How To Use Equity For Downpayment?”

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  1. 8
    linkus86 Says:

    You can play the secondary loan two step that you seem to know about, but the more common method is to simply make an offer on your new house with a contingency that you must sell your present house prior to performing on the contract for purchase. A seller is likely to respond with an agreement giving you “right of first refusal” which means that if they find another buyer without a contingency that they will give you the option to perform on the contract at that time (regardless of whether or not you have sold your house) or to take a pass on the (new) house. Often people pull this off such that the closing of your present house occurs on the same day (or same week) as the closing on your new house.

  2. 7
    Lawrence D Says:

    The best thing to do is a 1031 exchange. Please look into this. You can keep your equity or capital gains and exchange your property for another of like kind or better.
    What state are you in?
    lawrence
    law_edavis@yahoo.com

  3. 6
    CMass Stan Says:

    When I purchased a new home, I used money from my old home’s HELOC (which I had open for about a year) to cover the down, then paid off the HELOC and mortgage w/ proceeds from the old home’s sale a couple of weeks later.
    Mind you, that was in the days when money was easy and selling a home at your price wasn’t all that difficult. If you don’t have an existing HELOC on the old home, then you’ll have to go the bridge loan route. I hope you’re right about selling your home quickly, or else you’ll be stuck paying two mortgages for a while, however long that is.

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