You CAN Buy Your New Home Before You Sell Your Old One
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
You CAN Buy Your New Home Before Selling Your Old One
Word Count: 1026
Summary:
Think buying a new home before selling your current one is too risky? Think again!Myth Busted:
Many homeowners believe they must sell their current house before purchasing a new one. However, that's not necessarily true.Breaking the Myth:
Consider the story of one of our clients. They owned a beautiful $600,000 home and had no plans to move. Suddenly, their dream house in the neighborhood went up for sale. Initially, they thought it was impossible to purchase it before selling their current home.Fortunately, they contacted us, and we found a way for them to secure their dream home without waiting to sell their old one. We helped them make both homes affordable during this transition and keep the same long-term financing they would have had otherwise.
Here Are Two Ways to Buy Before You Sell:
Option 1: Home Equity Line of Credit
1. Access Your Equity: Use a Home Equity Line of Credit or a second mortgage on your current house. This will provide funds for your new home’s down payment.2. Financial Buffer: Set aside enough money to cover 6-12 months of mortgage payments on your old home. This prevents being pressured into accepting a low offer.
3. Proceed with Confidence: Once your old home sells, pay off both mortgages, leaving you with a single mortgage ?" just as if you had sold first, but without missing the opportunity.
Option 2: 100% Financing
1. 80/20 Mortgage Plan: Secure an 80% first mortgage and a 20% second mortgage, meaning no down payment is required.2. Leverage Proceeds: When your current home sells, use the proceeds to pay off the second mortgage.
3. Considerations: This approach may involve slightly higher costs in discount points, but the interest rate remains unaffected.
Both strategies maintain excellent permanent financing options for your new home.
Overcoming Challenges:
The primary challenges are managing two housing payments and gaining loan approval with this setup.Solution for Multiple Payments:
- Reserve enough funds from your current home’s equity to cover mortgage payments, ensuring you’re not paying out of pocket during the overlap.
Loan Approval via Automated Systems:
- Work with a knowledgeable mortgage broker who can navigate automated approval systems like FNMA’s. These systems focus on numerical evaluations, allowing approvals with high debt ratios if you have strong credit and assets.
Important Warning:
- Avoid dishonest practices like fabricating lease agreements to manipulate debt ratios. Such actions constitute mortgage fraud and are illegal.
Steps to Get Started:
1. Achieve Loan Approval: Begin with the computer-based approval process.2. Access Equity: If needed, promptly start the equity withdrawal from your existing home.
3. Make an Offer: Proceed with an offer on your new dream home.
4. List Your Current Home: Put your existing home on the market only after your offer is accepted.
At Integrity First Mortgage, we help clients use these innovative strategies daily. It's time to rethink conventional financing approaches. Remember, you can also save significantly on real estate commissions when selling your home?"potentially more than $36,000 on a $600,000 sale.
Happy house hunting!
You can find the original non-AI version of this article here: You CAN Buy Your New Home Before You Sell Your Old One.
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