5 Ways to Buy Before you Sell
Hey Waco! It’s Cristi McGowan at NextHome Our town!
you've heard anything lately about real estate it has likely been about the lack of inventory. And if your home is functioning well for you, then count yourself lucky!
But for those of you still trying to transition to work from home, the occasional and unpredictable quarantining of kids, or just wanting to get more out of your abode now that you're stuck there... well, it's hard to figure out how to move forward.
Correct me if I’m wrong, but The main reason seller's aren't selling is that they haven't found their NextHome yet. And, when they do, they can’t win the bid in a competitive market with the back out clause of needing to sell their current home first. Thus, they hold off on listing.
Ignorantly, As quickly as homes are flying off the shelf these days, i could say "hey! it's a great time to sell! you could make a mint!"
But, the incentive of incredible profits isn't enough to make one want to risk being homeless. Nor do you want to move twice or spend any length of time in an apartment while you wait for the right home to appear.
So, rather than sounding like a used car salesperson who is oblivious... i've got some creative answers that solve this double sided problem.
Today... We have 5 ways you can buy, BEFORE you Sell!
#1 - Your Rich Uncle
okay, i know. but seriously, If you cannot qualify for a loan to buy your next home because your down payment is tied up in the current home... Your "Rich Uncle" can GIFT you the money you need to buy! Obviously, you are paying him back when you sell your current home.. And while it's somewhat embarrassing to ask, your Uncle loves you and wants to see you comfortably living in your new space.
don't have an Uncle? Your employer is also a lender-approved gifter for down payments.
ok... so let's get a little more complicated...
#2 - lower down payment and then re-cast
Another option is to secure a lower down payment loan which, um, reduces the amount of cash on hand you need to buy. Before you say PMI, The beauty in this solution is this....
When you do, eventually, sell your current home, you are able to "re-cast" your loan on the new home.
This means you can make a larger deposit towards the principle of your note, and for a small fee, like $250, the lender will re-amortize the loan and (if you've now got what adds up to a 20% down payment, they can remove the PMI.
not all lenders offer this opportunity, so be sure to check with your realtor for recommended banks.
#3 - Rent your home to offset the debt
Next option is to rent your home to offset the debt.
If for some (VERY ODD) reason you do NOT have a ton of equity in your home, likely because you have only lived there for a very short time) and your only obstacle is debt to income ratios..... you can rent out your property which will offset that mortgage payment, freeing up your income to qualify to buy a new home.
again, not all lenders will approve this... so ask your agent.
Ideally, your new tennants would move in the day after you moved out! You may even create some passive income for yourself!
#4- Bridge Loan
Bridge loans are nothing new, but they are very limited. Meaning, only a few local banks offer them. This is how it works...
The bank will appraise your current home to determine how much equity you have. and then use that equity to qualify you for a new loan on a new home.
They will loan you the money to purchase the new home. and, When you sell your old home, there will be a "2nd" closing where you will make the required down payment and finalize the package on the new.
I know.... just call me.
#5 -The opposite iBuyer program
So the most exciting option i am presenting today is where you contract with a financial institution that will buy your NextHome in their name, with CASH, on your behalf. There are only a few companies that will make these purchases in Waco, Texas and so do your reserach, or ask your agent...
Why do these exist...
So, even if you have one of the options available of 1-4, AND, you've found a home you want to buy... you may still be competing with other buyers.
In a competitive market, the strongest offer is the one that is CASH. Since all YOUR cash is in your old home... These institutions will use their funds to make an all-cash offer on your new home, on your behalf.
When the new home is closed on.. you can move in! You rent it from the bank while you are prepping and selling your old home. When the old home is sold, you "buy" your new home from the bank, with a traditional loan - FHA, VA, Conventional, whatever.
As you might expect, there are fees for using someone else's cash. The fees and terms vary with the financial institution you choose to work with so ask your realtor to help you sort through the differences.
SEE! Just when you thought you were stuck in misery forever!!!! NextHome comes to the rescue!
Text me at 254-271-1354 to ask questions or schedule an online chat