One of the primary reasons we don’t have enough inventory of homes for sale is homeowners are AFRAID they will be left homeless if they sell their current home as they know they can probably sell their current home in 1 weekend; but they are terrified that they won’t be able to find a new home to buy in that same weekend. So, they stay put. So, here are 3 creative solutions for you—
Use the Post-Closing Occupancy Agreement that allows a homeowner to sell their home and remain living in their home up to 60 days after closing. This gives them plenty of time to find a new home.
Use a Bridge Loan, a 6 month home equity loan, that gives homeowners nearly all of their equity in their current home, by way of this loan and they use these proceeds for the down payment on their new home. This is a great option for people with higher income levels.
Homeowners buy their new home FIRST with a conventional loan with 5% or more down. Buyers can tap their liquid savings, retirement account savings by way of a 401k loan, tap their equity in their car or get a gift from a family member for this down payment. After they close on their new home, then they list their current home for sale and sell it.
Once their current home is sold, then they can use the proceeds to reimburse their savings account or pay off the new debt they took on AND pay down the balance on their new mortgage. Then, they can ask for a Re-Amortization of their loan term and this happens—their monthly payment will drop substantially.
For example, they sell their current home after buying the new home and they net $100k from the sale of their current home. This principal reduction payment will reduce their monthly payment by about $500 a month, plus most likely eliminate their mortgage insurance payment too! Thus, giving your clients the long-term monthly payment they want and can afford.
I helped several clients do this last year and they were so excited about this offer that I and you looked like heroes to them. This option only costs about $200 typically and they don’t have to refinance.