Today’s competitive real estate market can prove challenging for those that need to purchase contingent on their current house selling. From the seller’s perspective it adds another variable that can cause delays or even the entire transaction to fall apart. Contingent transactions still sometimes occur, but are less common than they were a couple of years ago. Many otherwise contingent buyers are often selling their house and requiring a rent back from their buyer to allow time to find their next home and close. Typically this is a decision that is made without exploring the possibility of mortgage options that can facilitate closing on the next home prior to selling the current. In a rapidly appreciating market it can be unsettling to sell your house without having a home in contract with agreed upon terms. It is the modern day equivalent of Tarzan letting go of the vine without another one securely in his grasp.
The goal is to have a mortgage structure that meets the buyers financial goals without the need to refinance after their departing house sells, and can usually be accomplished. From a qualifying standpoint I tend to find that people usually fall within one of three categories: 1) Has enough income to qualify for both payments and has a down payment, 2) Lacks in either income needed to qualify for both payments or down payment, 3) Lacks the income needed to qualify for both payments and down payment.
Since people’s finances vary, different products are necessary to accomplish a non-contingent purchase. Below is a list of products I commonly use to help people accomplish their goals.
|Down Payment Required?||No||No||Yes – Typically 5-10%||Yes|
|Can Departing Residence be Listed?||Yes – Must be listed for sale||Yes||Yes||IF HELOC made on departing house, no. If made on home being purchased, yes.|
|Benefit:||Easiest execution. Program is equity based. Lends up to 70% of your departing home’s value. About 10 days processing time||A 1st and 2nd combo can be structured for proceeds from your sale to payoff the 2nd. Leaving you with the mortgage you would have had without making a contingent offer.||Market rent from the house listed for sale is included in qualifying. If the property is sold and the loan is paid down, the payment can be modified.||Low cost. Can be paid off or paid down at any time.|
A free consultation to discuss your options can be scheduled by calling my office at: (949) 238-6035.