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Mortgage Guidelines for purchasing a NJ home without selling your existing home first

 

Interested in purchasing a home in New Jersey, but have not sold your existing property? 

 

 

I’m not an advocate of buying before selling in today’s market unless you understand and are comfortable with the risks involved, but if you insist on going this route, according to Rich Hirsh, from Mortgage Masters, here are Fannie’s guidelines:

 

If you are applying for a conventional loan, Fannie Mae requires that you either have 30 percent equity in your CURRENT residence OR 6 months cash reserves for BOTH homes. 

 

 

  Home Buying Scenarios

 

     #1 – Current Home is SOLD but not CLOSED prior to purchasing other one.

 

o   Must qualify for BOTH house payments and have 6 months worth of payment reserves for BOTH homes

 UNLESS

o   There is an executed purchase contract and all finance contingencies have been cleared on the home you are selling

    OR

o   Have 30 percent equity in current residence (Appraisal/BPO) PLUS 2 months worth of payment reserves for both homes

 

     #2 – Existing Home Converts to Second-Home Status

 

o   Must qualify for BOTH house payments

 

AND

o   Have 6 months worth of payment for BOTH homes

 

 OR

o   Have 30 percent equity in home being converted to 2^nd home

 

(Appraisal /BPO) PLUS 2 months worth of payment reserves on BOTH homes.

 

     #3 – Existing Home converts to Rental Property

 

o   Must qualify for both house payments AND have 6 months cash reserves for BOTH homes

UNLESS

o   Rental income can be used to offset monthly payment ONLY if home being converted to rental has 30% equity (Appraisal /BPO) AND home is leased AND security deposit has been verified.

 

The bottom line:  If you are buying a home without selling your current home, there will always need to be cash reserves after closing in the amount of 6 months PITI unless there is 30 percent equity in their current home.  Then you will need 2 months reserves! 

 

 

Rich Hirsch Mortgage Master Inc. Phone: 908-410-9066  eFax: 908-325-0018 rhirsch@mortgagemasterinc.com

 

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This entry was posted on Monday, April 20th, 2009 at 5:59 pm and is filed under Buying a home in this market, From Contract to Close, Mortgage Industry News, Sue's Picks. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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