How to Buy a Home in Sacramento When You Already Have a Mortgage

Buying a new house in Sacramento can be an exciting journey, but it can also be stressful and stressful, especially if you are buying a property in Sacramento while still having a mortgage on your present home. You should try to plan things so that you can sell your current property in Sacramento and then buy a home one in the same day. However, things don’t always go as planned. So, in this circumstance, let’s look at some of your possibilities for buying a property in Sacramento when you already have a mortgage.

Preliminary Steps

To buy a home in Sacramento with as little worry and anxiety as possible while already having a mortgage, you must first take the proper preliminary measures. The most significant among them are…

REVIEWING YOUR FINANCES

“Establish a budget for the acquisition of a second house. Determine how much of a downpayment and how much of a monthly payment you can afford. Lenders will require that your new monthly housing payment, combined with your previous credit commitments, do not exceed 43 percent of your gross monthly income before taxes and deductions. When calculating the maximum monthly payment, remember to factor in the property taxes, hazard insurance, and association dues.”

How to Buy a Home in Sacramento When You Already Have a Mortgage

SAVING UP SOME CASH

A lender will often want “between two and six months worth of payments for the new home stored in the bank as reserves.” This doesn’t have to be cash in a bank account or a savings account. It might also be your 401(k) or equities – anything that can be liquidated to meet the need.

“The lender can require proof of these funds in addition to the funds required for the down payment or closing costs. You would need to provide proof of the reserves via recent account statements.”

GETTING PRE-APPROVED

It’s also a good idea, when you buy a home in Sacramento, to get pre-approved for a mortgage so that you’ll know how much you can in fact borrow. And keep in mind that pre-approval is different from pre-qualification.

“A pre-qualification is simply a loan officer’s assessment of what loan terms the lender will approve, whereas a pre-approval is a guaranteed ‘yes’ for a certain loan amount. . . . The maximum purchase price and loan amount for the new home should be stated in the pre-approval.”

Practical Steps

Once you’ve done this preliminary work, you’re ready to take some practical steps to help you buy a home in Sacramento when you already have a mortgage. These include . . . 

HIRING A GOOD LOCAL AGENT

You want to reach as many qualified buyers as possible if you need to sell your current home fast. “A real estate agent can help you sell your home in Sacramento faster by performing market research, pricing it correctly, and listing it online where it will attract the most potential buyers.”

To discover more about how a Sacramento agent can assist you, just call (916) 507-2502.

MAKING A CONTINGENCY OFFER

If you already have a mortgage and want to buy a home in Sacramento, including a home sale contingency in your offer will help you relax. This is a condition in the buying contract that states that the offer is valid and that the sale will only go through if your present property sells first.

“The contingency addendum, which you and the seller both sign, specifies how quickly you must list your present house and how long you have to sell it before the seller can terminate the contract. If you fear you’ll have difficulties selling your house in Sacramento, a contingency offer is a fantastic method to protect yourself financially. However, keep in mind that in a competitive market, it may hinder a seller from accepting your offer.”

Be sure to consult a Sacramento agent at (916) 507-2502 to determine the best way to proceed in this matter.

Additional Options

You also have some additional options to lessen the financial burden when you buy a home in Sacramento when you already have a mortgage . . . 

RENT OUT THE OLD HOME

One option is to rent out your old property to meet the mortgage payments or to earn some money to help pay for the new home’s mortgage. A lease-purchase option, in which “a percentage of each month’s rent from the tenant contributes to a downpayment on your old property,” is an effective technique. The tenant is contractually compelled to acquire your residence at the conclusion of the designated rental time.”

USE A HELOC OR BRIDGE LOAN 

Most people just don’t have the finances to comfortably buy a home when they already have a mortgage, but a home equity line of credit (HELOC) or a bridge loan can help ease the financial burden.

  • HELOC – Allows you “to make several withdrawals within the draw period up to your maximum credit line. That way, you can draw the amount you need to close on your new home while waiting for your current one to sell.”
  • Bridge loan – A short-term loan that “covers the interval between buying your new home and selling your current one.” This can be a good option if you’re fairly confident that your old home will sell quickly. The downside is that it may be difficult to find a lender willing to offer a bridge loan.

Get the Agent Advantage

There are, of course, methods to buy a property with a mortgage, but it’s not always simple. That’s why it’s crucial to engage with a knowledgeable Sacramento agent who can walk you through the entire process and help you avoid common errors. So, if you already have a mortgage and want to buy a home in Sacramento, call us at (916) 507-2502 right now.

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