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Old 11-17-2020, 07:57 PM   #21
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Is there a reason you wouldn't just get a mortgage (not just a bridge loan) on the new home? I would think you could qualify if you have the resources to buy new w/o selling the old. It would save you the cap gains, and rates are low now. You could pay it off/down when you sell the old home, if that's what you want.

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Old 11-17-2020, 09:26 PM   #22
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Some may call this financial blasphemy

Bought new house September 2020, used 60 day IRA rollover for down payment. 48 hours after close used a credit card with insanely huge limit and equally insane balance transfer offer of 0% for 12 month to payback IRA. IRA funds went to Roth, taxes already withheld. W4 deduction adjusted to account for tax prepayment.

Planning to sell old house in a few months.

So far it is working out. Socking away cash to pay down insane credit card transfer in case old house sale stretches longer than expected.
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Old 11-17-2020, 10:45 PM   #23
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Originally Posted by ERD50 View Post
Is there a reason you wouldn't just get a mortgage (not just a bridge loan) on the new home? I would think you could qualify if you have the resources to buy new w/o selling the old. It would save you the cap gains, and rates are low now. You could pay it off/down when you sell the old home, if that's what you want.

-ERD50

It's an option. In fact before COVID struck we had a pre-approval letter from a major bank, but that expired several months ago. Now the bank won't renew the offer, hence looking at other possibilities. I suppose we could go through the process with another lender, but I'd really prefer to have lines of credit available so that we can immediately make a cash offer when a suitable place comes on the market.


I should add that around here, the market is really hot, and the advice we've been given is that 'no contingency' offers are the only ones that sellers will consider.
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Old 11-18-2020, 05:31 AM   #24
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I sold and bought at the same time. Once I located the house I could afford/wanted I contacted the realtor who made the listing and made an offer. If she could sell the house I was living in then I would buy the house she was trying to sell (it was part of an estate but in bad repair). She could sell my house for any amount as long as the total cost of the house i was buying did not exceed $X. She jumped at the offer. Two days later she held an open house and sold it in 3 days. I signed the papers for the new house the same day. I was moving into the "new" house within a week.


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Old 11-18-2020, 06:24 AM   #25
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Making a offer on a new house raises the question of where the money comes from.

Suppose I sell stocks from my taxable account. Capital gains tax will of course be payable. The funds released would be applied to a cash offer on the new house. After the old house sells, I'd reinvest in taxable account stocks to get back to the original AA.

Assuming that, even without this transaction, those stocks would be sold eventually, I would essentially be paying capital gains tax in advance, but the long term result would be the same.

Am I missing something here?
DMIL signed a purchase contract for a new home before selling her old one.

I advised her to get a Home Equity Loan (or maybe it was HELOC) on the old old home which happened to paid off in full.

The HELOC had lower fees and easier application than a traditional mortgage. I am not sure how this differs from a "bridge loan".

-gauss
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