Ok! So you had the surprise third child AND you got the promotion? #Winning. But wait...you need a bigger house to accommodate your growing crew. Here are the current options to "BUY before you SELL" in our real estate marketplace. Bridge loans and two equity groups newer to the marketplace are today's focus. But first, let's check out the April market update.
I realize that while this is daily jargon in my world, if you're not in the industry it's a foreign language! So, to simplify things, there two options below, a local private money lender for a bridge loan OR the "Buy before you Sell" option, the newest option in the industry.
Ins and outs of the BRIDGE LOAN:
A bridge loan is used when a buyer needs to borrow temporary funds based on the equity in their existing home in order to purchase a new home. Read here
for more information about bridge loans. Here
is a link to a Sonoma County local lender, Sun Pacific Mortgage & Real Estate that offers temporary or "Bridge" loans. Another local private money lender is McCormick Home loans
. They offer Bridge and temporary loans as well.
Keep in mind that you are not accessing your current home's equity, rather you are borrowing up to 65-75% of your new home's purchase price and you will need to put down 25-35% in order to secure the new home purchase.
Alternatively, these two newer, "Buy Before you Sell Programs", unlock your home's equity and are back by multi-state large companies who BUY your old home and/or access it's equity without monthly fees.
is based out of Austin Texas. They purchase your old home for market value, determined by your realtor and their own inspection. I do suggest engaging your own realtor from the start and coming up with a fair market value prior to bringing in the big guns. UP Equity purchases your home and closes within 2 days of your new home's purchase. You choose your new home, the lender, title company, etc. as you would ordinarily. UP EQUITY pays out in 2 installments from your home's proceeds. From what I gathered in my research and conversations, they pay off any mortgages AND cash you out on their equity less their 1.9% transaction fee (I need to see their contract in writing to confirm) and title/ transfer closing costs (about 1% of any sale). NO real estate commission is paid to transact between UPSIDE and you as a seller. Your realtor helps you purchase your new home and gets compensated by the seller of your new home, as usual. You pay your realtor when your OLD home sells and is technically owned by UPSIDE. This is my favorite part, if the home sells for OVER the original amount agreed upon YOU AS THE HOMEOWNER reap that benefit and receive a supplemental check, installment 2! You have 14 days to list your home after it's sold to them and 180 days to CLOSE! Definitely achievable with a good realtor on your SIDE. I see a major UPSIDE to this scenario (I couldn't help myself with the pun). The seller maintains control of their purchase and sales of their old home. This is rare. Click here
for some more information.
The other buy before you sell option that is close to Upside is what Homelight offers. Here's a pretty video
Homelight has really tried to penetrate the real estate market in the past few years by developing their own online title company, disclosure software, online lead generation w/ referrals paid to realtors, mortgage companies, etc. That's a lot of hands in one pot! Their newest program recently launched, "Buy before you Sell", is no exception. It does what UPSIDE does except they charge 1.7% if you use their lender, or 2.4% if you use your own lender or purchase with cash. I'm not a fan of the 2.4% scenario for a number of reasons. While I am a homelight endorsed agent, (typically they automatically solicit the top 5% of agents in any market) it doesn't mean we are BFF's. They made this fancy link
for me to educate peeps about this program.
If you choose to go with Homelight, you have 10 days to go on the market after you have purchased your replacement property and 90 days to close escrow.
The best way to determine what's right for you is to discuss your options with your trusted realtor and get some nonobligatory quotes on these scenarios. Despite rising interest rates, we are still in a competitive seller's market. I think we will see half of the volume of sales we have seen in the past few years + due to the higher cost of mortgages. Many homeowners want to stay put and feel like they found their "pot o' gold" at the other end of the rainbow with their 2.5% mortgage rate. However, this lack of inventory is a consistency I see in this next real estate cycle. The benefit is that it's sustaining home values and helping them INCREASE, just like milk and eggs. And just like milk and eggs, we need a place to live as much as we need to survive. Life happens and what you need from "home" can change too. When you're ready, I'm here for you! Come visit me anytime at the office.