Ama Adeniyi – 762-217-0181 – Atlanta, GA.
It can be complicated to buy and sell a home at the same time. You need to be able to sell your old home quickly while finding and financing your new one. But with the right knowledge and planning, you can make this process easier and more manageable.
Below we will discuss financing options that can help you achieve your goals.
Bridge Loans
A bridge loan is a short-term loan that can help you finance the purchase of your new home while you wait for the sale of your old home to close. It is available for only a short period, usually up to 12 months. Bridge loans can cover the down payment and closing costs of your new home before receiving the proceeds from the sale of your old home.
Home Equity Line of Credit (HELOC)
A HELOC can also serve as a financing option when buying and selling a home simultaneously. It is a revolving line of credit that uses the equity in your current home to fund the down payment of your new home. A HELOC has lower interest rates compared to a bridge loan, but terms and conditions may vary from one lender to the next.
Contingent Financing
This financing option is typically offered by homebuilders and allows you to finance the purchase of your new home with a contingency clause that depends on the sale of your old home. If for some reason, your old home does not sell, the purchase will not finalize, and you will not be obligated to take on the new home’s financing.
Assumable Mortgage
An assumable mortgage allows the buyer to assume the previous homeowner’s loan, including the interest rates, terms, and monthly payments. This option can be ideal if the previous homeowner has a mortgage with lower interest rates than the current market rates or if the buyer is struggling to secure financing due to low credit scores or income levels. However, it’s essential to note that not all mortgages are assumable, and assuming a mortgage can be complicated.
Low Down Payment Options
If you want to avoid taking out a loan altogether, low down payment options are available. Depending on your credit and qualifications, you may be able to put down as little as 3% for your new home. However, these options often come with higher interest rates and private mortgage insurance (PMI) payment requirements.
Cash Out Refinancing
Cash out refinancing is a financing option that allows homeowners to refinance their mortgage for a higher amount than they currently owe. This option lets homeowners access their home equity while maintaining their current mortgage. The additional funds can then be used to finance the purchase of a new home. The downside of cash out refinancing is that it can increase the amount of interest you’ll pay over the life of the loan.
Rent Back Agreements
If you need additional time to find and finance a new home, you may want to consider a rent back agreement, which allows you to rent your old home from the new buyer for an agreed upon period, typically a month or two. This option provides a slower timeline without the pressure of having to coordinate buying and selling simultaneously.
Buying and selling a home at the same time can be a challenge, but with the right financing options, it can be worth the effort. Consider your options carefully, and don’t hesitate to reach out to me for advice and guidance.
Remember to factor in all costs, including loan fees and PMI (private mortgage insurance), so you can find the financing option that works best for you. With the right plan and guidance, you can soon be enjoying a new home and the profits of the sale of your old one.
