If you’re in a situation where you need to sell your home before you can buy, there are two things you can do. One, you can sell your home and get few months rent back from the buyer. You can even ask for two months free rent back, depending on your market. And that gives you around three months to look for your new home. If that doesn’t sit well with you, there’s another option. You can sell your home contingent upon finding a new home. The buyer has to agree that if you don’t find your new home within certain time frame, the deal is off. Keep in mind there are going to be fewer buyers that will agree to this. But in a market with a low inventory, this is a smart move. If you’re not sure which options will be best for you, feel free to give me a call. I’ll guide you through it.
Buy Before Sell (Source: OriginPoint):
1) Signed letter of intent to list the departure
2) Verify 20% equity in departing residence
3) HELOC funds can be used for down
4) 80% to $2.5M and 75% to $3M
5) 12 months of reserves on old home and new home
6) Rates in the high 6’s low 7’s currently
7) Interest only available (50 and 40 year fixed terms)
Example:
Departing Residence:
Estimated value: $2M
Loan balance: $900k
Mortgage payment on their 3% rate = $3,800
Net proceeds: $1M (after 5% selling costs)
New Home:
Target purchase: $2.5M
Loan balance with 20% down: $2M
Mortgage payment at 7.25% int only = $12,000
Reduce $2M loan by $1M with net proceeds
New payment = $6,000
*Who wouldn’t spend an extra $1200/month for their dream home?
Here are more related topics:
- Cross Collateral Loan Program
- Cross Collateralization vs. Bridge Loans
- What is Proposition 19?
- Selling Strategy
- Contingencies in California
What is your home worth? click here.
Homes for sale in Carmel Valley click here.
Shirin Rezania Ramos | 858.345.0685 | www.shirinramos.com | Compass, DRE 0203379
