Cash offer and bridge loan option
If you currently own a home and want to move you may be feeling like you are living out the proverbial line “what came first, the chicken or the egg?" Assuming you are contingent on the sale of your home (click here to learn more about contingent vs non contingent), you have two options. Neither of which are great.
Option 1: List your current home for sale, hope that you get an acceptable offer, and that another home that suits your needs becomes available so you can close on the same day and move once. If you don’t find a home, you'll have to rent somewhere (Mom and Dad's house, anyone?) or an expensive apartment while you continue to look for your next home. If you like moving, this isn’t a bad option, but I have yet to meet someone who enjoys loading and unloading a moving truck multiple times in a short period of time (or paying movers twice). The only benefit may be you decide your VHS tapes and college textbooks you haven’t looked at since the last time you moved aren’t as important as you thought they were.
Option 2: Find the dream home that checks all the boxes, write a contingent offer, and hope the sellers don’t have another non-contingent offer come in. Not to mention dealing with the scramble of having to have your current home painted, carpets cleaned, and all the kids' toys picked up for staging and showings. The fact is, most sellers are biased against contingent offers, and often, will take a non-contingent offer even if it means a little less money.
What if there was a better option?
We have a relationship with a company that may be able to provide a turn-key solution, and it may not even cost you anything.
Here’s how the cash offer/bridge loan option works.
Step 1. Meet with your real estate agent and decide on a reasonable listing price.
Step 2. You will receive a cash offer for approximately 80% of that list price. You will also be provided with information on bridge loan financing options. In most instances, you will be able to get a bridge loan for 75% of your home’s value less any current mortgage balance.
You can use this money a few ways:
Down payment for your next home
6-month mortgage payment “cushion” on current mortgage
Fix up your current property to make it more marketable and receive top dollar
Step 3. Write a non-contingent offer! The cash offer in step 2 allows us to exclude your mortgage payment in the debt-to-income calculations.
Step 4. Continue marketing your home for up to 6 months to maximize the sales price. If you receive a better offer than the existing cash offer, you can accept that offer and cancel the initial offer.
Please note the company earns its fee from the bridge loan. If you receive an acceptable offer on your current residence to close the same day as the new purchase, you won’t need the bridge loan. In the event this scenario played out, there would be no cost/fee for the program, but it allows you to be non-contingent from day 1.
Interested in learning more? Book a time to chat and we can look at your scenario and how the numbers look.
