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Real estate agent and the mtg broker she works with want me to refinance loan with them, take equity out of it and buy a townhouse, move into townhouse while maintaining my mtg with my present home while trying to sell it.
I called Wamu (my original lender) and questioned him about this and he told me that a person cannot carry two separate loans on homes within 50 miles of each other.
Real estate agent said it is better to have empty home to show for sale and that is why I should move out of it and move into townhouse (which she is also selling to me ... nothing signed yet). How could she not know this important detail?
First, the person you spoke to at WAMU may have been telling you their policy but it certainly wasn't the law. A person can have 2, or 6, or 10 separate loans on properties within 20 feet of each other.
Second, your real estate agent is not doing you any favors. She is trying to get herself a commission right away rather than waiting for it, and you will be in the lousy position of paying two mortgages and trying to sell a home when the market is cooling off. Unless you are desperate to move I strongly recommend that you not refinance your current home and use the equity to buy the new home, but instead wait to buy a new home until you have a firm contract to sell your current home. I also strongly recommend that you find yourself a new real estate agent because this one is taking advantage of you and certainly not acting in your best interests.
I believe that there has been some mis-communication. Your real estate agent wants you to refinance your existing home and pay cash for the new one, which means that you would only have one mortgage. It is true that you cannot get two "Owner Occupied" loans simultaneously. Also for a scond loan to be secured by a "Second Home" mortgage, it would have to be far enough from your primary residence, to be reasonably construed as a vacation home. In addition, many loan programs will not allow you to do a "cash out" refinance, if your property is listed for sale.
Unless the product that the mortgage broker is trying to sell you has a prepayment penalty, that broker could run the risk of paying a substantial "Recapture" penalty for early pay off of the loan that he puts on you current residence should you sell it and pay the loan off in a couple of months. Most wholesale lenders have a 120 to 180 day window, to recover from the broker, an origination fee, and any "yield spread" on loans that pay off early. I just passed on doing a loan for a borrower who had told me that he would pay his new VA loan on his new home off with proceeds from the sale of his free and clear old home. I hope that this helps.
The townhouse is 230,000 and the home I live in has 140,000 equity in it. The theory was to refinance original home with new mtg lender, take equity out, use equity as down payment for townhouse, move into town house, take 5 grand and paint and recarpet original home and show it empty as she said views like to see vacant homes and that they sell faster.
My present original home has been owned by me for 7 years but the two houses immediately beside it have been bought by first generation Latino families and this has caused a change in the flavor of my particular area, making me believe my house value will drop due to it (what can I say...).
As a side note, I am witnessing these new homeowners by me getting homes with some rather interesting loan packages.
Why can't mtg lenders be upfront and honest, I wonder. The biggest event in a person's life, one of them anyway, could be marred by an unscrupulous mtg broker and real estate agent (who seem to work hand in hand).
Very stressful. Was up all night worrying about this. All that I have is in this home. I could manage staying here as opposed to having a bad home loan.
I would disagree with the idea that a home sells better empty, if of course it is cluttered, too much funiture and in bad need of repair, it needs to be fixed, but often I have known realitors that actually have funiture put into a home to give it a "lived in look" to get better offeres on the home.
And loans are like opinions, there are 1000s of them and no two alike, if you have great credit getting a dozen loans on a dozen houses should be no issue, Now be sure that you can afford and pay the larger mortage on the one home and the new mortage for months and months if you old house does not sell. ( I hope it will quickly but often one never knows)
I also wish to add that your real estate agent is full of it.
House sell better with stuff in them, NOT empty.
When people go see houses, if the house feels "homely", it will sell faster and for a higher price. A barren/empty house will take longer to sell and sell for less money.
Your real estate agent only walks a commission now, on the townhouse she wants you to buy now. Don't do anything right now until you sell your current house.
You don't have to get an interesting loan package. Instead of using a mortgage broker who works hand-in-hand with your real estate agent, try talking to a loan officer at the bank where you keep the majority of your money. Banks often have far less fees than mortgage brokers and their rates are usually competitive. If you have a decent credit rating and a good history with the bank there's no reason why they wouldn't offer you an attractive loan.
Another thing you may want to do now is retain a real estate attorney even though you haven't entered into any contracts yet. The attorney represents you and looks out for your interests. If your real estate agent proposes something you can run it past your attorney. If a mortgage broker has an "interesting package" your attorney can tell you if it will be beneficial for you. This could be one of the biggest purchases of your life and you should have someone with experience on your side, looking out for you.
I concur with all the fine advice previously posted. There is nothing inherently wrong with a real estate agent and motgage person having a close working relationship. Most agents have their favorite mortgage person that they can rely on to get the job done. Problems arise when the agent/broker put their self interest above what is best for their customer. There is no "Best" mortgage for all situations. Just keep in mind that just like a car dealer, mortgage lenders do not "give" stuff away. The more whistles and bells a product has, the more potential pitfalls are included. Generaly I have found FNMA and FHLMC (Fannie Mae and Freddie Mac) conforming products to have less hidden hooks. If you plan to stay in your new home for a longer time, I would go with the plain old 30 year fixed loan. Unfortunately, most borrowers who get the Whiz Bang loans, don't have a clue as to what they have purchased. Wishing you the best.
p.s. If you are just looking to get a (20%) or more down payment to buy your new home now, you might consider getting a Home Equity Line Of Credit secured by your old place from your bank. They usualy have Zero closing costs to the borrower, and might charge you a few ($500?) if you pay it off in the first 3 years.- a bargain. Also, most conforming fixed rate loans have a provision that for a fee of about $250 they will allow a one time principal payment ($10,000 min), and reamortize the loan reflecting the principal reduction.
Thank you again! I have appt with real estate agent and broker today at 5:30.
The realtor's father owns townhouse and thanks to the sage advice, which I received from you all, we are possibly considering renting townhouse until my house sells and then my purchasing the townhouse. If I did not have 2 cats, 1 dog, I'd probably just rent a little place for the next year (until housing prices adjusts) but that is impossible under these circumstances.
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