Want to put your hard-earned equity to use? Many JFKLiving clients have used equity release strategies to sell and buy at the same time. Others have released their home’s equity to renovate the kitchen, and others even withdrew their equity to buy an investment property! However you use your equity to thrive, we’re with you every step of the way.
In a “normal” market where there’s less competition to buy homes, it’s standard practice to sell and buy at the same time, using a home sale contingency (i.e. your offer states you can only buy their house once your's sells). But the low acceptance rate for contingent offers in our current market leaves you at risk of not finding your next home. It might have you wondering if you’ll ever be able to move house if you need to sell your home in order to buy the next.
Let’s talk about a real life example of how a homeowner worked with The JFKLiving Team and a trusted mortgage lender to sell their home and move onto the next stage of their life.
South Jersey couple Alexa and Zak wanted to move from their Mount Laurel condo to a larger home with a yard.
Alexa had her heart set on the town of Medford where her family live. This couple made a great decision to jump on the property ladder years ago in buying their cute condo so they could start accruing equity. But now, wanting to start a family, they worried how they’d be able to move to a home that suited their needs better in this competitive real estate market.
They reached out to local real estate expert Pip Haxby-Thompson, who went over their options with them. Pip quickly paired them with an incredible mortgage lender who introduced Alexa and Zak to home equity release. Using a Home Equity Line of Credit, or HELOC, the mortgage lender was able to assess the value of their condo, and set up a line of credit for them to use that was 80% of the equity they had accrued.
Turns out, they’d built up so much equity in their home, it would pay for the whole downpayment on the home of their dreams! And it wasn’t long before they found the perfect property in Medford, just down the road from Alexa’s family. Using the line of credit, they were able to put in a great offer that wasn’t contingent on the sale of the condo. Their offer was accepted, and a smooth transaction led them to getting the keys in record time!
During this period, Pip helped them list the condo which sold so quickly and for a great price. A new family moved into their condo, and Alexa and Zak were able to start their new life much sooner than they ever could’ve predicted, thanks to using a HELOC.
…to Alexa and Zak’s story of wanting to sell your home and move, but are struggling to manage the financial aspect? Let’s talk about all the strategies you could use to eliminate that dreaded home sale contingency and help you land your dream home...
Here’s the four most popular options we see our clients use:
A HELOC is a unique product where, unlike a traditional loan where you borrow money immediately, you are simply establishing a line of credit (like a credit card) for when you need it. HELOCs are great products for homeowners who have equity in their property and want to use this equity to make a purchase. HELOCs are great for moving house, because you can make the application (which usually takes a few weeks to go through), then the line of credit will sit there until you need it (i.e. when you find a house you want to buy).
A bridge loan is a short-term financing solution that provides homeowners with the funds needed to purchase their new home before selling their current one. These loans usually have higher interest rates than traditional mortgages, but approval for a bridge loan is typically very speedy. This means it’s a great option if you’re looking to access funds quickly to close on your next home.
If you’re not interested in a loan but want to buy your next home non-contingent, you could consider renting for a short period of time. Many homeowners move their belongings into a storage unit and rent an apartment until they find their next home. This might work for you if you want to bide your time and wait for the perfect property to come on the market, as opposed to rushing to find your next home. The downside, naturally, is becoming a tenant again, and the costs that come with that. Particularly in South Jersey, there is a huge amount of competition for rental properties so you might struggle to find temporary accommodation.
If none of the above work for you, a rentback might offer you a smoother move. What it could look like for you: you sell your property to a buyer, on the condition you can rent it back from those buyers for a specified period of time (in many sellers markets, many buyers even offer a free rentback period, meaning you don’t even pay rent!). This scenario allows you to sell your home and free up the funds to buy your next home non-contingent.
