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We are in the process of selling two homes and relocating to…

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We are in the process...
We are in the process of selling two homes and relocating to another city. The first home will close in about a month, the second house will not go on the market for another month, so therefore closing is a couple months away. We expect to realize gains between $600-700k on the sale of these two homes, with about 75% of it coming from the sale of the second home.
We want to put an offer on a property in the city we’re moving to in the near future. Offer will be around $750k. If both homes were selling right now, we would be putting 80% down with a small mortgage.
Since the second home is so far in the future on closing, I would rather its sale not be a contingency on this offer (its a bit of a seller's market). My thought is to put the proceeds from the first house as a down payment (20%+) and get a mortgage on the rest. After the second house sells, refinance and pay down the principal at the same time with the gains from the second sale.
Is this a good idea? What costs will I incur?
Is there another way to do this? Is a bridge loan a good idea in this case?
Submitted: 4 months ago.Category: Finance
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Answered in 1 minute by:
3/21/2018
Financial Professional: Richard, Tax Attorney replied 4 months ago
Richard
Richard, Tax Attorney
Category: Finance
Satisfied Customers: 57,043
Experience: 29 years of experience as a tax, real estate, and business attorney.
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Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

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Financial Professional: Richard, Tax Attorney replied 4 months ago

Good evening. Yes, that idea works just fine. But, there is no reason necessarily to go through the extra cost of refinancing the 80% mortgage on your new house. There is no prepayment penalty on a residential mortgage so you can simply pay down the principal amount; that won't reduce the payments, but the number of remaining monthis will be reduced considerably and you will have the house paid off before you know it!

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

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Customer reply replied 4 months ago
Richard, this is an incredibly unhelpful, borderline asinine response. Of course there are potentially good reasons to refinance; I would be paying the front loaded mortgage interest payments, which on $600k would amount to $30k or more just in the first year. Are you able to provide any detailed information of the benefits of refinancing from a large mortage to a small one with a cash infusion vs. a bridge loan?
Financial Professional: Richard, Tax Attorney replied 4 months ago

I deal with these issues everyday as I'm in the real estate development business in addition to being a lawyer. But, given that you thought my initial response was "incrediblly unhelpful, borderline asinine," I think it would be more productive for me to opt out and let you interact with another expert from this point on. Therefore, I am going to opt out to open your question up to all experts so another expert can hopefully timely provide you the information you seek. Please do not respond to this post as it will only slow the process of such an expert picking up your question. Take care.

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