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Buying and Selling at the same time

I Need The Money From My Current Home | Caprika Realty
?? Looking to sell and buy another home, but need the money out of your current home??? We refer to this as a timing issue. Luckily, there are options out there for everyone and their unique situation. In this video, you will discover 5 common solutions to this timing problem.

Hey there, if you're thinking about selling your home, but you know that you need the money out of your current home in order to go purchase the next one, there are five different things that I want you to think about. The first item is this. Can you do what's called a recast? Here's how a recast works. Let's pretend for a moment that you can qualify to purchase your next home while you still own your current in terms of qualification wise. But you might say, "But Brendan, I have enough money to put 5% down, but I really wanted to put 20% down, and I need that... that extra 15% is in equity in my current house."

Well, if we can qualify you to purchase your other home, so you don't have to sell first, we might be able to get you into the home with 5% down, let's say, and then do what's called a recast, which would work like this. We would sell your home after you find one to move into. Once we close, take the money that you make from it and instead of just applying it towards your principal payment, where you just owe less money, instead we redo your amortization schedule. Just for easy math, let's say you had 50 grand that you're getting and you're buying a $400,000 house, instead of just paying a little bit of that principle balance off and still having a higher payment, now we could redo your loan so it's based off of 350, take the 50 and apply it. That's called a recast and it's super cool. Not all lenders can do it. If you want to do it, talk to us, talk to your lender. It's generally for conventional loans. Again, certain places like Navy Federal Credit Union typically don't do these kinds of things.

Number two, a bridge loan. You've probably heard of these. I will tell you, depending on the market, they can be hard to do. But the general idea simply is, if you have lots of equity in your current home and you want to purchase the second home, you may be able to "bridge the gap" where basically they're using part of the equity as collateral in your primary home to buy your second one. The rates and everything else can be a little bit tricky and you may end up refinancing once you get in there, but it is a very cool product as well. Again, not a lot of lenders do them and some of them may only do up to like 80% of the value of your home and all these other things. There's all these little nuances, but I just want you to know it exists so you can explore that possibility.

Number three, "Can you borrow against retirement?" If you can qualify for the new home and it's just a question of down payment, "Can you borrow against retirement?" I'm not saying to empty your retirement and not pay it back. I'm saying, "Let's go sell your house right away as well and as soon as it closes, you can pay yourself back." And as long as you do that in a timely manner, there probably is not going to be any tax implications or anything else. But, you can always check with your CPA and your HR department for your specific retirement plan.

Number four, the bank of mom. The bank of mom and dad. So many of our clients, including myself, have tapped the bank of mom and dad where you can get "a gift" and use that money as a down payment to get into the home. So, that's the bank of mom. Just note for our purposes it does have to be a gift. If it's a loan, they're going to count that as a debt-to-income ratio. The other thing is, depending on the loan type that you're looking at, some loans don't allow you to get a gift. If that's the kind of loan that you're getting, I would recommend that you get that money, wait 60 days, and then go forward. The reason I say that is because the banks, they're looking at the last 60 days of statements. So, if the money is in prior to 60 days, they generally don't ask about it. If, all of a sudden, you're trying to get a loan and a whole bunch of money appears in your account, they're going to say, "Hey, where did that come from?"

And lastly, of course, you can sell first. Now look, a lot of people fall in this situation where they can't qualify for what they want while holding their existing home. And, that's okay. That's a pretty normal thing. If that's your situation, then what we need to do is focus on selling first and just have a temporary spot that you can live in, which again could be friends, could be family, could be a short-term rental. There's some different options. We're going to talk about that in a different video.

But for right now, what I'm going to say is, if for whatever your reason is, you have to sell in order to go buy, money-wise, then hey, let's focus on that. Let's make sure the buy side makes sense, like getting a loan and everything else. Then, let's crank it out. Let's sell your home, get as much money as you can. Then, you can hit the ground running as soon as we're under contract and go find you a place to go buy. Hope that helps, hope that makes sense. I am Brendan Spear of Caprika Realty, and I wish you the best of luck in your home-selling journey.


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