Can I apply for a new loan before I sell my current house (where I have a mortgage)?

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We own a house now, but we know we’re going to sell it and buy a new home around November this year. Can we now, and be approved in advance to the next house before the house in which we live today is that we sell on a mortgage? We are on the implementation of our house currently for sale in about a month of planning.

  1. Reply
    Lauren F
    April 29, 2011 at 11:02 pm

    It is probably a good idea to talk with your bank before you go shopping to see what you might be approved for. Also, be careful when you do sign a contract on your new house that you put in a contingency that you current one has to be sold first. If not, you could end up paying two mortgages for a long time. My fiance just sold his house, and it was on the market for 8 months.

  2. Reply
    A A
    April 29, 2011 at 11:07 pm

    You should certainly try, because a pre-approval will help you negotiate with the seller. remember that no sale closes in less than 90 days even in a good market.

  3. Reply
    April 29, 2011 at 11:11 pm

    YES, but in current marketplace, unless your income has grown dramatically, you are unlikely to qualify. You may need to try for a bridge loan, but again, chances aren’t good.
    The real estate market is so bad that lenders are unlikely to give you a loan on a new property until your other house closes, or is at least under contract.

  4. Reply
    April 29, 2011 at 11:51 pm

    You could be pre-approved, but they won’t let you finalize the loan until after you’ve sold your other house. If you find a house you really like, you could purchase it, contingent upon the sale of your current house, but the seller would still keep it on the market. Just a quick tip on selling — rent a storage space and clear out everything but the absolute essentials in your house, including your storage areas and closets. You want to make your house look as big and open as possible. Also, if you’re not a good decorator, consider hiring a staging company to spruce up your house. You should hurry and get your house on the market as soon as possible. People with kids like to move in the summer, and interest rates are low, so there are more buyers out there. If rates go up a lot, the number of buyers will go down dramatically.

  5. Reply
    April 30, 2011 at 12:03 am

    Yes, however remember that most pre-approvals are good for 6 months or less and the current market situation suggests that selling your existing home will take longer than that.

    If you find the house you want before you unload the one you have, you may very well end up with either two loans (if the bank thinks you can afford two at once) or losing the one you want because you haven’t sold the one you have. Or something like that.

  6. Reply
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    April 30, 2011 at 1:03 am

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    April 30, 2011 at 1:52 am

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  13. Reply
    April 30, 2011 at 5:30 am

    Hello, you can definitely put in an application for a pre-approval which is ‘subject to the sale’ of your existing property. This means that the application would be using the net sale proceeds of the property you are selling as a deposit for the new home, and assuming that your existing house will sell before you find a property to buy.

    Should you find something you want to buy before you sell your existing property however, which happens often, you may wish to look at bridging finance – this lends you outside what you might normally be able to borrow on the condition that you will sell your house within 12mths and bring the debt back down to a level which is affordable to you.

    Its complicated and definitely on a case by case basis, make sure you have a good lender and they’ll tell you what’s best for your situation.

    Good luck!

  14. Reply
    April 30, 2011 at 6:00 am

    While this is probably possible, it is going to make more things complicated in the long run. A mortgage or a home loan uses your house as its collateral. This means that you are using your current home, not your new home as the collateral. When you sell that, you will have to have the new house appraised and go through the entire process again.

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