In a balanced real estate market, there are an adequate number of homes for sale and an adequate number of buyers to buy those homes. In a balanced market, people typically sell their existing primary residence before purchasing a replacement property.
In the current market, there is an imbalance with an unusual shortage of inventory. This often requires homeowners to secure their next home before selling the existing. It’s an understandable approach to avoid a two-step move where they rent, or stay with family, until they find a desirable and available home to purchase.
In a competitive market, homebuyers who write contingent offers usually do not see their bids accepted.
Thankfully, we have several solutions designed to help you buy a new home and then sell your existing home. These options are critical to maneuvering the purchase of a new home without leaving oyu in a bind.
Do you need access to down payment funds? Any of these options may work to secure that payment:
- Second mortgage (HELOC on departure residence or new property)
Coming up with a down payment (or cash at close) can include gift funds or accessing your 401k. A second mortgage on your departure residence is another option, as the interest rates for the new home will be lower. The new home can also be purchased with a second mortgage, but the interest rate is a little higher. Once you sell your property, you pay off that second mortgage.
If you have equity but can’t carry two mortgages, one of these programs may be the solution:
- Bridge Loan
- Allied Cash Buyer Program
A bridge loan is available if there is significant equity in the departure residence. Both properties are used as collateral to secure the bridge loan. Allied’s Cash Buyer Program is a modified bridge loan that doesn’t require selling the departure residence before moving.
When you sell your departure residence, you can “recast” your mortgage by making a significant lump-sum payment that results in a lower principal balance and a lower monthly payment. Your interest rate stays the same, and a recast is easier and less expensive than a refinance.
The lack of housing supply has been escalating since 2013, for both purchasing and renting. Making a move doesn’t have to mean a list of contingencies with undesirable consequences. Anyone on my team will walk you through various scenarios, to ensure that you have a place to live while transitioning from one home to another. Contact us @alliedrockymountains.