The housing market is hot, and finding your dream home can feel like winning the lottery. But what if you haven’t sold your current place yet? Don’t worry, there are ways to snag that new house without the stress of temporary homelessness. Here are 4 strategies to buy before you sell:
A Home Equity Line of Credit (HELOC) lets you tap into the value you’ve built up in your current home. It’s like a credit card for your house, giving you access to funds for your down payment and closing costs. Here’s the catch: You’ll need good credit, a steady income, and enough equity in your home (typically over 20%). While HELOCs offer lower interest rates initially, they are variable and can fluctuate with the market.
Pros:
– Affordable and Simple: Often free to obtain with straightforward qualification.
– Access to Cash: Provides significant funds for your new home purchase.
– Interest-Only Payments: Manageable monthly payments.
Cons:
– Processing Time: Can take a while to secure.
– Qualification Impact: May affect your ability to qualify for a new mortgage.
We’ve crafted a solution that turns you into a cash buyer, enhancing the appeal of your offer and giving you a competitive edge. Our Power Buyer Program eliminates the common obstacles with traditional financing, such as mortgage contingencies and extended closing times. This gives you a major advantage in a competitive market – sellers love the speed and certainty of a cash offer. There is a program fee, and you’ll accrue some interest until you secure permanent financing for your new home.
Pros:
Competitive Edge: Cash offers are more attractive to sellers.
Simplified Process: Avoids the complications of traditional financing.
Faster Transactions: Allowing you to buy your new home before you sell your exiting home (in as little as 14 days).
Cons:
Power Buyer Fee: There is a fee for the use of the funds and interest accrues until you close your long-term financing.
Need a temporary funding solution? A bridge loan uses the equity in your current home to buy your new one. You won’t have to make immediate payments on the bridge loan, but you’ll need to sell your current home within a specific timeframe (usually around 6 months) to repay it. This option is good for short-term financing, but be aware of closing costs and fees associated with bridge loans.
Pros:
Substantial Funds: Access to significant cash for your new home.
No Immediate Payments: Easier to qualify for a new mortgage.
Quick Process: Close in as little as 14 days.
Cons:
Costs: Fees of 2.3-2.4% of the loan amount.
Equity Requirement: Must have a 25% equity cushion post-loan.
If you can handle the responsibility, renting out your current home can be a smart move. You’ll keep the benefits of your low mortgage rate and generate rental income that can help qualify you for a new mortgage. Renting comes with its own challenges, like finding good tenants and dealing with maintenance issues.
Pros:
Retain Low-Rate Mortgage: Keep the benefits of your existing low-rate mortgage.
Inflation Protection: Homes and rental income generally rise with inflation.
Additional Income Stream: Generate rental income.
Cons:
Landlord Responsibilities: Managing tenants and property upkeep.
Financial Risk: Vacancies can impact your finances.
Qualification Challenges: Future rental income may not fully offset your current mortgage payment.
Buying a new home before selling your old one is a strategic decision. Each approach – HELOC, cash buyer program, bridge loan, or renting – has its pros and cons. Carefully consider your financial situation and goals to choose the best option for a smooth move into your new dream home.
Ready to Get Started?Contact us today to discuss your options and find the perfect strategy for buying your new home before selling your current one!
