New Job/possible move

[azanon]

I think I'm likely to land a new job/promotion in another city (GS-13, yay!) that's going to require me to move. I'm currently a home owner and have a mortgage. The move is going to cause my wife to have to quit, so my income's gonna drop from about 105K to 75K temporarily. I'd anticipate she could get reemployeed within 3-4 months though near her old rate, but nothing's guaranteed.

What's the best way to transition in terms of homes? Will i be able to get a lender to let me buy another 150-200K dollar house when i already own a 180K one with only about 70K equity in it? Will i be able to swing two mortgages temporarily? I only have about 11K in liquid money (not tied up in assets/IRAs) to utilize for this transition. My moving costs will be relatively minimal since the federal government will move me, and will pay a lot of the costs associated with buying and selling the homes (such as closing costs).

Anyway, this is the first time i've moved as a home owner, so it will be a new challenge/adventure. I'm accepting any/all tips. I am a USAA member, so i'm wondering if their mover advantage program is good too.

Thanks,
Azanon

[Gumby]

Congratulations on the new job. Condolences on the move. My last move was 14 years ago and I wouldn't want to do it again.

Have you considered renting for awhile in your new location? It will give you a chance to explore the area in depth and find the best location and best deal. It will also afford you time (a) for your spouse to get back into the work force; (b) to sell your old home and, therefore, (c) to qualify for a higher mortgage.

[Patrick]

Quote:

Originally Posted by Azanon What's the best way to transition in terms of homes? Will i be able to get a lender to let me buy another 150-200K dollar house when i already own a 180K one with only about 70K equity in it? Will i be able to swing two mortgages temporarily?

I'd consider renting for while, but I don't think you'd have a problem qualifying for a second home if your credit is good. Call a couple lenders and ask them. I like Amerisave: www.amerisave.com

[mb]

Agree with Gumby if you are not familiar with the local market.

We made a poor choice on one cross country move because we weren't familar with the market.

[Caroline]

Quote:

Will i be able to swing two mortgages temporarily?

Congrats on the new job!

Regarding two mortgages, I've got two now, but only because one is on a rental property. I've SEEN people buy a second residence before selling their first one -- back in the early 90s when the market was slowing as it is now.

It was pretty ugly. The looks on their faces as they came to work every day convinced me never to try it myself.

FWIW.

[lets-retire]

AS someone who has moved often, I've lived in six states/countries in the last 15 years, sell your fist house before you buy the second. When you move to the new area I'd rent for a few months and pay a lot of attention to the news. Many times an area might look alright, but it is located within a few blocks of a very bad area, that you wouldn't discover until after you buy your house.

[grumpy]

I agree about renting first. Another suggestion: subscribe to the local newspaper of the new location before you move. This will give you a feel for the crime, political and social situation in the new town.

Grumpy

[Brat]

I agree with others who say rent. What is your new metro area?

[kcowan]

During one of my moves I got caught with the first home not selling for a year. Is this a company move? If so what expense concessions have they made? Your bottom line needs to be communicated as part of any move package (even if it is a new company, they may be flexible in discussing total financial impact).

I would go after them for paying 100% of the new location rental until the first home sells. Then you can go into home buying with confidence. Also because of the nationwide price meltdown, why not observe price trends on the new area. Even after your have sold home one, it may be worthwhile financially to continue to rent until the market stabilizes.

[Brat]

He's a Fed civilian employee. His employer doesn't negotiate much.

If his house doesn't sell they will appraise it and buy it, but I wouldn't expect top dollar. If he is in a declining real estate market exercising that option sooner rather than later may be wise.

[Meadbh]

Rent, for all the reasons people have said, and because you will make a more informed decision without unreasonable time pressure.

[Brat]

And his wife will have time to find a job and child care, both of which may impact where they choose to purchase a home.

[azanon]

Wow - so far pretty overwhelming for renting first. Let me add some details that might change the consideration:

1. The move is less than a day's drive (under 8 hrs); for now i'd prefer not to be more specific than that.
2. Moving twice (rental then final home) would be considerably more hassle and stressful than just moving to a new home and being done with it; wouldn't it?
3. I get a 10 day paid "house hunting" trip, and I can also recruit my wife to help find a good spot.
4. The city i'm moving to is smaller than Little Rock, so its not like there can be that many places to live. Given the demographics of the city and the amount of house i can afford, its going to be on the "nice" side of town and its just too small for there to be more than one or two "nice sides of town".
5. They pay for "one" move, but wont pay for a second, so i'd have to fund the second move myself if i rent first. Moving myself is just out of the question; i'd pay for it if i had to.
6. My current home is in a great location, so there should be little difficulty in selling it; especially considering that Ive already decided I'll hire a real estate agent to sell it. Yeah, the market is stabilizing/dropping, but I should be able to offset that by simply not asking too much for my house.

If you guys still think i should rent first, i'm going to give that strong consideration. I know the average person here is/has been very successful, and I value you guys input a lot. Thanks already.

Azanon

[Rich_by_the_Bay]

I've been in similar situations 3 times over 32 years.

Lenders are used to this, and the term "bridge loan" is not new. Renting may be fine, but the double-move thing and possible storage of furnishings can get costly not to mention emotionally draining. Here are the solutions that we've tried from best to worst in our retrospectoscope:

Best: Buy new house on an one-month option ARM loan. I do NOT recommend this kind of mortgage under most circumstances. But for us, we knew we could and would pay it off once the old house sold. Thus it provided an interest-only, low rate solution to get us through the 7 months of being a dual home owner. We got by with low payments, a big tax deduction, and no rate increases. House 1 sold, loan promptly paid off.

Good: Take a home equity loan on house 1 as the down payment on house 2. Do this BEFORE you list it, since many lenders don't allow HELOCs on a house that is listed for sale. Buy house 2, bite the bullet on double payments for a few months, then pay off the HELOC from the proceeds of house 1.

OK: List home 1. If it doesn't sell by start of work, she stays behind and you move into a Residence Inn or month-to-month rental property. Commute home on the weekends or have her pay you conjugal visits. Probably the most financially prudent option, but boy does it grow old fast. We did this once and eventually just bought a cheap condo on a HELOC cause I couldn't stand the loneliness and impermanence. Of course, house 1 sold a month after we bought the condo, but that was fine.

Finally, these situations seem to cause more distress than they deserve. Regardless of how it unfolds, it's only money -- maybe a few thousand at most. So do what's comfortable, rememenber it's temporary, and move on with tthe new life and job.

Oh -- and congratulations on the promotion.

[azanon]

Quote:

Good: Take a home equity loan on house 1 as the down payment on house 2. Do this BEFORE you list it, since many lenders don't allow HELOCs on a house that is listed for sale. Buy house 2, bite the bullet on double payments for a few months, then pay off the HELOC from the proceeds of house 1.

Do you think a HELOC would be less hassle than just getting a piggy loan for the 20% down payment for the new home? I should be able to swing two loans (plus the piggy loan) for a few months without too much issue.

I cant do your "best" scenario because i only have 70K equity in the one i'm selling, and i'm looking to buy a 150-200K dollar house.

[Rich_by_the_Bay]

Quote:

Originally Posted by Azanon Do you think a HELOC would be less hassle than just getting a piggy loan for the 20% down payment for the new home? I should be able to swing two loans (plus the piggy loan) for a few months without too much issue.

Our HELOC was a piece of cake, though we had 90% equity in the house at the time.

It should boil down to a calculation based on current rates. Usually the HELOC would be deductible, too. If you take any other nonmortgage loan for the down payment, it may not be.

[Brat]

My concern is time on the market in today's enviornment. Azanon should consider the real estate market he will be selling in. This is not the time to bet the farm on a prompt sale.

He should also seek out the move specialist in his agency. That person can let him know his options, and potential pot holes in the transfer road.

A new job, and a move, is very stressful for a family.

[brewer12345]

Quote:

Originally Posted by Azanon Do you think a HELOC would be less hassle than just getting a piggy loan for the 20% down payment for the new home? I should be able to swing two loans (plus the piggy loan) for a few months without too much issue. I cant do your "best" scenario because i only have 70K equity in the one i'm selling, and i'm looking to buy a 150-200K dollar house.

Az, it sounds like you are not up for the 2X move thing, and I cannot say I blame you. I assume that the job is worth the move, all things considered? Just thought I would mention it.

If I were in your shoes, I would list your existing house as soon as you had the job nailed down. I would go house hunting and make sure that I scouted the area thoroughly to make sure I knew where I wanted to live,. What I found to be very helpful was to get a tour from someone (not a realtor) who lived in the target area and could tell me lots of stuff worth knowing. Also get out a map and actually look at the roads to see where the cul-de-sacs, highways and whatnot are.

Assuming that you are comfy with a bit of risk, I would be prepared to jump on a house if I saw one I liked. It is up to you, but I would not include a sale contingency in my offer (i.e. deal doesn't go through if you don;t find a buyer for your house with this clause). Assuming your house didn't sell in time for the closing on the new house, I would simply buy the new house with an 80/20 combo loan package. What this boils down to is a no-money-down loan package to buy the new house, consisting of a first mortgage in your desired flavor (fixed, ARM, hybrid, whatever) and a HELOC for the last 20% of value. You don;t care what the rate is on the HELOC because as soon as your existing home sells, you will use the proceeds to nuke the HELOC. Presto, you end up with one home with just a first mortgage in your desired flavor.

The risk is of course that your old home doesn't sell and you take a beating trying to carry both houses.

Be careful who you deal with to get the mortgage/HELOC. There are lots of sleaze-bags out there who will rip you off. See if Etrade or E-loan can do what you need, since they guarantee up front exactly what all the costs and rate will be and they eat the difference if they get it wrong. Most mortgage providers just present you with the bill.

FWIW, this sort of thing is why I am not a fan of having most of one's net worth in retirement accounts. But that's not germane to your quandry.

[azanon]

Quote:

Originally Posted by brewer12345 Az, it sounds like you are not up for the 2X move thing, and I cannot say I blame you. I assume that the job is worth the move, all things considered? Just thought I would mention it.

Well, there's pros and cons. The pros are a higher GS grade (moving from 12 to 13 is a desirable jump), a better location for even higher grades (14/15), it should be a more enjoyable job, and the new location will be a significantly lower cost of living. Cons are my wife gives up her part time job and moving further away from extended family. But my wife's LCSW allows her to get a job pretty much anywhere since that field is in high demand, where my degree/job field is so specialized, i have to look out of city usually to get a promotion.

Quote:

FWIW, this sort of thing is why I am not a fan of having most of one's net worth in retirement accounts. But that's not germane to your quandry.

I guess if i had to, i could liquidate about 20K in Roth principle contributions without penality (per Roth rules), but I'd prefer an alternative option. Ive always been mindful of this benefit of Roths in case i really got in a bind for some cash without alternatives. Aren't Roth's great?

.............

talked with the wifey tonight, and she said she'd be willing to hang back and sell the house first, which would allow her to keep her job in the interim, so here's what i'm thinking. Sell the old house first with out stuff still in it when its being shown which should be a good thing cause our furniture looks great. With the house still furnished, it will be easier to hide blemishes that will probably reveal themselves after we empty the house. In the meantime, i just get some cheap, hopefully furnished one-bedroom apartment or something at the new location, and rent month-to-month. When the house does sell, i'll require a clause in my contract that does not give possession of the house to the buyer for as long as it takes us to find our next house (which really, shouldnt be that long if we've been doing our homework in the meantime). I'll pay the buyer per diem cost if necessary in the interim for this option.

This strategy would allow me to not have to be rushed on the sale of my home, would give me all the equity of the previous home in hand to buy exactly how much house i want at the new location, would keep me from having two mortgages at any point, would give me enough for a downpayment (to avoid PMI), and should put me in a better negotiating position for the new home such as for the interest rate.

BTW, i do have a 3 year old son. We already pay for daycare so.....

How does that sound?

[uncledrz]

Az
Congratulations on the new job.

As to your plan, sounds resonable. Will avoid the two house problem (I've never been there, but have seen it happen and it does seem to cause more that a little bit of stress.)
The apartment idea will allow you and your wife to explore the new city before you decide where to buy.
Good luck.

Tio z