Financing Primary Residence Upgrade

[Ryan Lam]

Trying to figure out a realistic way to potentially upgrade my primary residence by selling my current home and purchasing another in a competitive market (San Francisco Bay Area). 

Any thoughts on how to finance this? 
not sure how challenging it would be to have a sales contingency, but if I can include that and still competitively make a purchase, that is always preferred.

Option one would be to access my HELOC + bridge loan to fund the new purchase at 20% down, then sell the first home. Proceeds from the first home sale would pay off the HELOC, bridge loan, and the rest could either pay down the new mortgage to have it hopefully recast instead of refinanced.

The other option would be to access the HELOC to fund the new mortgage at 10% instead of 20%, eat the PMI temporarily, then once the first home sells take the proceeds to put toward the new mortgage and hopefully have it recast and drop PMI.

I’m assuming the bridge loan is the riskier of the two in the sense that the loan duration is so short and probably slightly more expensive.

Any other ideas on how to finance? Wouldn’t want to come out of pocket. Ideally want to use proceeds from sale of current residence.

After all is said and done, still would like to have a little bit of funds available to purchase another investment property, but that would ultimately depend on how all the numbers work out and if there even is enough profit to support that. Or I guess if there are still proceeds leftover from the sale of the first home, anything in excess above what is needed to get the new mortgage to 20% could just be held in cash and reinvested into another property. This eliminates the whole HELOC conversation with the new property.

[Kushaal Malde]

@Ryan Lam this is not an atypical situation seen here in the bay area. the easy part is selling, the hard part will be buying. would need to know a few more details, but here are some raw thoughts on both scenarios...

-sell first, buy later: sale can be quick, can buy next home competitively with cash and then just take out delayed financing up to 80% ltv. that is assuming the next home is less than or equal to the net proceeds from the sale. otherwise you could use it as 10% down payment and not have to worry about DTI limits. again need more details like what are our dti limits?

-buy first, sell later: again, dti may be an issue. but can use HELOC, fund at 10% (even jumbo). recast after sale proceeds applied. also don't have to worry about moving and living somewhere else in between home ownership.

are you buying similar value home or lesser? do you have a place to stay in between? dti limits? would love to get more details and hear your thoughts overall!