How to Move if Your House Hasn’t Sold Yet in MI

So you’ve found your dream home. There’s just one problem: You haven’t been able to sell your house yet. So what do you do? In this article, we hope to help you figure out how to move if your house hasn’t sold yet in MI.

Moving can be tough when you are trying to buy and sell a home all at once. The FHA, Fanny Mae, and Freddie Mac all have rules about getting a second mortgage while you still own your home. If you want to secure an additional mortgage, you will have to clear a few hurdles.

How to Move if Your House Hasn’t Sold Yet in MI

First off, to qualify for a second mortgage through the FHA, you must meet certain qualifications.

You need to have a good reason for needing to move right away, and not after your current house has sold. For example, moving because your family needs a larger space, you are separating from your spouse or for work purposes.

Also, you cannot owe more than 75% of the value of the first home. There are additional restrictions as well, do your homework before assuming you will qualify for an additional loan through the FHA.

1. Borrowing from Family

Borrowing from family can be a viable route, but it comes with risks if not handled properly. To avoid misunderstandings or damaged relationships, always put the agreement in writing. Here’s how you could approach it:

  • Example: You could agree to borrow $10,000 from a family member and establish clear terms, such as paying them back in full upon the sale of your first home. You could even set a modest interest rate, like 3%, to make the arrangement feel more formal and mutually beneficial.
  • Why put it in writing? It protects both parties. Without clear terms, there’s the potential for hurt feelings or strained family dynamics. If you think borrowing could jeopardize the relationship, it’s best to look into other financing options.

2. Bridge Loans (or Wrap Loans)

A bridge loan helps cover the financial gap when you’re buying a new home before selling your current one. Instead of juggling two full mortgage payments, this loan combines both into a single interest-only payment for a short period.

  • Example: Imagine you owe $200,000 on your current home and are buying a new home for $300,000. A bridge loan could combine these into one loan, allowing you to focus on making interest payments only for the next six months until your old house sells.
  • Considerations: While convenient, bridge loans typically require strong credit and a loan-to-value ratio of 80% or less across both properties. They also come with higher interest rates and fees compared to traditional loans.

3. Borrowing from Your 401(k)

Borrowing from your 401(k) may be an option if other financing avenues are limited. Some employers or plan administrators allow you to take out a loan from your retirement savings.

  • Example: You could borrow up to 50% of your 401(k) balance, capped at $50,000. This could provide the down payment or additional funds needed for your new home.
  • Considerations: Be cautious, as failing to repay the loan could lead to taxes and penalties, and you may miss out on market gains within your retirement account while the loan is outstanding.

4. Rent-Back Agreements

A rent-back agreement allows the seller to temporarily remain in the home after closing, usually while they search for a new home themselves. This is a smart way to alleviate some of the financial pressure if you’re carrying two mortgages.

  • Example: Suppose you close on a new home but the seller needs time to relocate. You can offer them the option to rent the home back from you for a few months. This way, you can collect rent while carrying your mortgage, reducing your financial burden until your current home sells.

5. Adding a Contingency to Your Offer

A “home sale contingency” protects you from committing to buy the new house before your old one sells. It ensures that you won’t have to carry two mortgages if your original home doesn’t sell on time.

  • Example: If your house is new to the market and priced competitively, you can include a contingency in your offer that the closing on your new home will only happen after your old home is sold. This can make sellers nervous, but if you assure them that your home is priced to sell quickly and include a timeline to close, it could make them feel more comfortable with the arrangement.

Whether you are looking to buy or sell, we can help you with all of your Real Estate needs! Fill out this short form, or give our office a call today! (248) 949-1224

Get More Info On Options To Sell Your Home...

Selling a property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options.

Simply fill out the form...

  • This field is for validation purposes and should be left unchanged.