Many homeowners struggle with the timing of buying & selling homes in the current real estate market. They don’t think they can or want to own 2 homes at the same time because they bought a home before selling their existing home or go though the stress & hassle associated with moving into temporary housing because they sold before buying to avoid 2 mortgages. Depending on your personal financial situation, there are ways to make this transition much smoother then you think – here are a few of the options that might be available to you.
- Cross Collateralization. This program is designed for a buyer who has a strong equity position in their current home. As a buyer you are able to access this equity with a loan that collateralizes both your current home and new home. When you sell your current home you can pay down the loan to reach your desired payment. It allows for a higher debt to income ratio to assist with qualification.
- Departing Residence Program. This program helps the seller that has the funds for the down payment on the next home, but not the income to qualify. It allows you to utilize the potential rental income you would have from your current house in your income calculation, without having to actually rent out your home.
- Asset Depletion. This program helps the seller who doesn’t have a traditional income, but has assets such as stocks & mutual funds, to derive an asset depletion income to qualify for the loan. This is especially helpful for sellers who are retired.
- Restricted Stock Units. This program helps executives and many in the high-tech industry that can show a 2-year history of receiving RSUs as part of their compensation to be included as reserves or income for qualifying purposes.
- 40-year loan. This program allows you to qualify for a larger loan amount – it is available on all occupancy types, cash-out refinances are allowed, and it can be used in conjunction with one of the other loan programs listed above to provide you with more options.
- Buy/Sell with a long close and/or rent back option. This is a non-financial solution to the problem. Negotiating to purchase or sell with a long close timeline and/or potentially a rent-back option – you may need to look at an off-market purchase or sale for this option.
There are other options such as bridge loans and utilizing your home equity line of credit – the key message is don’t assume you can’t make the move of your dreams happen – talk to your Broker and Lender to explore your options!
Need a recommendation for a lender, want to know how much equity you have in your home, or want to find out what your selling and buying options are?
Article Published in the Woodinville Weekly Real Estate Section. Since 2017 The Blue Team has written the bi-monthly Real Estate Column sharing their expertise in this community publications, sharing their Tips for Home Buying, Tips for Home Selling, Tips for Investors, Buying & Selling Luxury Homes, Real Estate Transitions (Including Relocation & Senior Real Estate Tips), and Equestrian Real Estate.