The Easy Button For Moving?

 

The Easy Button For Moving? New Financial Solutions Providing Alternatives…

For those seeking to move up, down or around, there are an increasing number of options available to supplement the traditional paths. Due to the costs and complexities, many of these are niche products, however they can be great alternatives if the traditional methods don’t work well.

Traditional Methods

Buy Before Selling… very convenient with no temporary housing needed and moving at your own pace, however requires higher financial qualifications for income & assets, as well as risk of double housing payments.

• Bridge Loan… for those who have the income for buying before selling, but don’t have the large savings, this can be an opportunity to access their equity for a down payment though it tends to be expensive. Selling Before Buying… lower costs, easier financial qualifications and greater budget certainty, however often requires temporary housing and increases pressure to buy quickly.

Buying Contingent… lower cost and no temporary housing needed though these offers are rarely accepted by sellers especially when there is substantial buyer interest or competition.

New Solutions

While these traditional methods work for most, when they don’t these niche products might be able to fill the gap:

• BRIDGE LOAN + GUARANTEED OFFER - this program solves the income issue of the buy before you sell method of moving for those with substantial equity in their current home. It offers up to 50% funding for your next home using your current home equity as collateral, and provides a guaranteed purchase of your home which allows your current mortgage to be removed from your debt to income calculation. The combination of these terms provide you a substantial down payment and allow you to qualify for your next mortgage like “Sell Before Buying” borrower.
  However, this program can be expensive with fees between 2-3% of the purchase price of your next property, plus the typical origination and closing costs of your standard mortgage. In addition, it has a very steeply discounted offer price for your current property (though this can be avoided by selling on the market in less than 180 days).
• MAKE ME A CASH BUYER - these services make you a cash buyer by purchasing the next property for you, and selling it back to you once you’ve sold your current property. This is a great option when you need to be competitive on the next home, however it is even more expensive with fees in the 2-3% of the purchase price plus daily interest on funds borrowed which add up to 10-12% annual rate. In addition, there can be additional closing costs and taxes due to the 2 transfers of the property. In total, these costs can be 5-7% of the purchase price… and still not include closing costs for a new mortgage.

While the costs of these solutions may be high for some they offer great value for specific profiles of clients who cannot buy before selling and are looking for properties where contingent offers are impossible:

Moving Twice Is Very Costly: Financially or Emotionally - interim housing and moving especially can be quite costly for those working from home or caring for kids, elders or pets at home.

Unicorn Hunters - those looking for properties which only show up a few times a year, may find paying this premium is cheaper than waiting another 6 months for the next property and its further appreciated price.

What’s Right For Me?

The best solution for you is unique to your goals and situation, and through experience we can guide you through the process of evaluating your options and determining the best path forward including connecting you with partners for any of these solutions. If you think these new solutions might help you, give us a call and we can help you make a great decision.