Buying a new home when you already own a home...

[Kimberly T.]

My husband and I still live in the first house we ever bought (6 years ago), so we haven't experienced the "move up" house-buying scenario yet (buying a bigger/better house to raise a family), but I'm looking to the future and want to know what our options are.

Assume, for the sake of argument, that you can't qualify for both mortgages simultaneously.  How do you qualify for a loan, and what are the requirements related to selling your current home?  Does it make a difference if you're buying in the same area versus another state far away?

I'm just trying to understand the process and requirements.  Thanks in advance!

[Patrick Parry]

@Kimberly T. 

 @Shaun Weekes 

is correct.  Especially the in theory part. You can get the approval no problem.  The lender will be best suited by getting a net sheet from your escrow company to show the potential gains from the sale minus all closing costs.  However, this will mean you are a contingent offer.  So your offer is far less attractive then a non contingent offer.  This does not mean you will not be able to get your offer accepted, it will just be that much harder. 

Contingent= unless this happens this cannot happen. 

The best solution if to put your home on the market and make your sale contingent on a replacement property.  So you can get in contract and tell your buyer I have X days to find a replacement property before I remove my contingency, and we are in a binding contract to sell.  Another solution is to sell your home and ask for a rent back on your property.  Escrow will not allow a contract for rent back to exceed 29 days.  A longer rent back it will have to be agreed upon outside the sales transaction between you and the buyer(who will be the new landlord for a limited time) 

As you can see all scenarios involve extra steps, and these will add to the already complex process of a sales transaction.  Our OC market has slowed significantly, ( In regards to market time and appreciation) because the investors have left for the most part and more sales are contingent.  So in theory getting the approval is fairly simple, but the actually process is fairly complex.  Feel free to reach out if you would like a more in depth description of a sample situation for you. 

Also, in regards to a vacation home anywhere qualifies for a vacation home.  The determinant is that there must be a primary residence and it has to be a logical distance away form the secondary residence to qualify as a second home.  The large issue here is qualifying for both mortgages.