Buying a house - financing questions

[carmenere]

H and I are looking to sell our condo and buy a SFH and we're trying to figure out whether buying first is a viable option for us. I'll front-load my questions:
-Does having a 15-18% down payment instead of 20% make a big difference in whether an offer gets chosen/accepted? Are there any other drawbacks?

-How much cash should we set aside for any unexpected repairs or expenses that come up within the first ~3 months after buying a house? We’re not looking at houses that require any major work, and we’ll save up for any updates we want.

Details:
We live in a HCOL area where the housing market was very hot last spring/summer, and even if it cools off this year it will still be competitive. We have a lot of equity in our condo, good retirement savings for our age, but not a huge amount of cash savings. H is looking for a new job and will probably be making $15-30k more, but it may take a while. We want to buy first then list our condo, because we're confident that the condo will sell quickly and we don't want to scramble to find a house. 

We've seen price cuts on several houses we like this week, and we're tempted to buy now. Right now we have enough cash for a 20% down payment and closing costs, which will leave us with about $15k in savings. Once we sell the condo, we'll use most of the profit to pay off student loans and replenish our savings to about 6 months' worth of expenses. We could save for a few more months and buy in spring/summer but we'll pay more then, so it would be a wash. A 15-18% down payment would leave us a bigger cushion for repairs or other issues that come up between closing on a house and closing the sale on our condo, which would ease my mind.

[fryjack2]

We bought our house and then sold our condo because, like you, we knew our market was hot and didn't want to scramble for housing if we sold before having somewhere to move to.

I think how much you need for repairs depends on the condition of the house and what you want to do. We bought a house in June and repainted the entire place, replaced the floors in 75% of it, got a new HVAC system, did some landscaping, and bought furniture for the extra space we now have. All of that was about 40k. We still have projects to do, but are waiting to decide what we actually want versus need to do in the space.

As far as the DP amount, I know that different markets are different. As are mortgage requirements.

It sounds like you are a good place financially to go with either option. If you put 20% down, you can use the next 6 months to save and decide on repairs and fund them as you go. Or you can put things on your CC until you sell?

[imojoebunny]

When we bought our current house, we wanted to have a mortgage for less than what we had in cash, but we still owned our previous house, and didn't want to sell, until we moved for various reasons. We put the cash we had, and got a HELOC for the remainder we planned to put into the house on the new house, when the other house sold. Sold the other house, and paid off the HELOC on the new house in about 3 weeks, so we ended up with the mortgage we wanted, and 0 on the heloc, which we had to keep open for two years, but that was fine, since we didn't need the credit, and it didn't cost us anything other than the 3 weeks we had it open. We definitely got more money by waiting to sell, until we could paint and stage, and avoided the hassle of having to do a simultaneous closing. We bought a new construction house, so we were already under contract, but it made it a lot less stressful to not have to worry about the exact closing date. The Heloc only cost about $750, and the extra we made by selling a "perfect" move in ready, staged house was probably more like $30K. We were confident our other house would sell very quickly, and we were right.

[k3am]

Talk to a realtor. It's really market dependent. We live in a VHCOL area and had several offers turned down because while our house was under contract, it wasn't sold yet. The only offers being accepted had 0 contingencies on them. (ETA: we were told that even if we didn't list the sale of our house as a contingency, the sellers were viewing it as one)

Things have cooled down here a bit and with interest rates rising, some houses seem to be sitting a little longer. (In our neighborhood, the only houses I've seen sit are ones that need a more than cosmetic work). An agent focused on your area should be able to give you better advice.

[fryjack2]

Also, as a PP mentioned, your offers on homes may be impacted if you have contingencies like the sale of your home.

In our VHCOL, hot market, we waived everything with our offer. We were out of the country when the house we bought was about to hit the market. Our agent went to a broker showing and took an inspector with her. We put in an over asking, no contingencies offer with a response deadline. We had to up our offer after the sellers got a bunch of offers but they liked us and we didn’t want to lose the house so we offered more.

But we had been watching the listings and market for the last 4 years so had a pretty good idea of what we had to do.

[namasteak]

Well we bought a house that we thought didn’t need a lot of repairs and we spent $20k replacing gas & sewage lines as well as some extensive electrical work. So I would say $10k-$20k that you could use for repairs or furnishings.

[namasteak]

We also retextured walls and painted the whole house for $9k.

[L]

Market is so site specific. That being said we’ve bought 7 properties (6 in hot markets) and about half the time we had the full 20% (or more) for a down payment. We did not ask for any contingencies though except inspection and often offered full price.

Buy a 1yr Home warranty (or ask for one in your offer) which will cover any major repairs. I’m so glad I asked for one on our new house...it’s only 14yrs old but apparently this is the age when so many things break...and they have! I’ve owned much older homes with way less problems.

[dancingirl21]

We bought our current house 1.5 years ago putting 20% down and after that had about $30k in cash. The house didn't need any big repairs immediately but things we wanted to do. We ended up having the whole house painted, new carpet in the family room, all the light fixtures, outlets, and floor grates replaced, and buying a few new pieces of furniture. In the end we spent about $15k on those improvements.

We were in a hot market at the time and our first house sold within 24 hours. We didn't consider any offer that didn't put at least 20% down, and in the end, went with a buyer that was all cash, no contingencies and wouldn't do an appraisal. But the house we bought had been off and on the market for over a year. I think they would have accepted an offer with less down, but we had the 20% and wanted to put that much down. So I think it really depends on the activity on the house you are looking to buy.

Can you carry 2 mortgages just in case the condo doesn't sell quickly?