Most mortgage bankers are limited to the standard financing programs, not the creative ones that can make all the difference. Having assisted hundreds of clients with their financing needs over the last 35 years, and still counting, I know the creative options that can make all the difference to get clients into a new home when the standard beaten path just won’t work. Here’s one that works when you’re trying to buy before you sell.
CROSS COLLATERALIZATION
This has been around for a long time, but it doesn’t get a lot of publicity. It really comes in handy when a buyer is concerned about selling their home, but questioning whether they will find an acceptable replacement property. This is a great solution. It works primarily for the homeowner that has a large amount of equity in their existing property.
The homeowner gets themselves preapproved, then starts looking for their new home. When that home is found the lender will combine the property value of their current residence with the value of the new residence together and will typically lend up to about 75% of that combined value. The paperwork and appropriate steps are taken and the lender funds the loan to complete the purchase! Once the departing residence is sold, the new mortgage is reduced by that loan amount that was on that property and the new mortgage is recast to reflect lower mortgage amount and a lower payment. Or, if mortgages rates have fallen and there’s a better rate available they can refinance.
There’s a lot of moving pieces, but it is simpler than it might appear.
Give us a call and let us eliminate some of the anxiety that comes with buying and selling a home.
