Buying a new home and Selling Your Frederick CO home at the Same Time – Financing Options

Buying and selling your Frederick CO home at the same time can fell nerve wracking. There are many reasons why homeowners will just stay in their home thinking they don’t have the option to buy and sell a home. This results in living in a home that doesn’t fit your needs anymore. Here are some reasons you may be holding off on selling your current home and buying a new home.

• You don’t want showings going on while you are still living in your home.
• You are worried about family health issues with strangers coming in and out.
• You are scared you will be homeless in between buying and selling
• You are concerned that your offer won’t get accepted if it is contingent on selling yours.
• You are worried you won’t find the perfect home and will have to settle for less.

The good news is there are financing options out there to help you avoid all of the above! Just like anything, convenience comes with a cost so the options I am presenting to you can come with additional costs.

Knock.com – I am a certified knock agent which means I have teamed up with Knock to offer this option to my clients.  The highlights of this program are.

• Buy first then you have six months from the closing date of your purchase to move out, get your home on the market and sell it.
• You don’t have to list your home until it is empty.
• You don’t have to risk not finding a place before yours goes on the market.
• You don’t have to write a contingent offer.
• Knock will advance you up to $25,000 for repairs to your home (to be paid back at closing)
• Knock will pay your currents home mortgage until you sell it for up to 6 months (to be paid back at closing)

Disadvantages

• For convenience sake you will pay Knock 1.25% of your new homes value (this is what they charge as their loan origination fee)
• You will have to use the knock program lenders therefore you are locked into their rates until you can refinance out.

Bridge Loans

There are a limited number of lenders that do these types of loans however some of the local credit unions will.

Highlights

• You can buy first then sell.
• You choose when your home goes on the market.
• You don’t have to risk not finding a place or competing with a contingent offer.
• You will receive a new loan from your home’s current equity to be able to make the down payment on a new home. This loan is usually paid back interest only.
• The new loan is a short term loan so will only exist until the sale of your previous home is finalized.

Disadvantages

• To qualify for a bridge loan you need to qualify for both payments on your current home and the new home.
• You will have to cover 2 mortgages plus the additional bridge loan until your current home is sold. Good news is if priced right in our market could mean 1-2 payments if that.
• You will own 2 homes at the same time with 2 mortgages plus the extra bridge loan, if something goes astray and you can’t get your current home sold this could be a lot to carry.
• You may pay higher fees on the second loan.

Taking out a home equity line of credit

Not all mortgage companies will allow this, it can be tricky to find one that does but it can be an option.

• You have the down payment from your current home’s equity for you next home in hand.
• You may be able to buy another home if you can qualify for both mortgages without selling your current home.
• Other than the mortgage for your new home there are no special second or third loans you have to carry.

Disadvantages

• You have to be able to carry both mortgages
• You have to find a lender that will allow using home equity line of credit for a second mortgage.
• You will pay 2 mortgages until you sell your current home.

Like I stated at the beginning these options are not for everyone. There are extra costs and some extra risk involved. I would love to talk through your options with you, email me at haley@youraussieagent.com if you would like a little help weeding through these.

Also remember, it is not impossible to buy and sell your Frederick co home (or any other area home) at the same time without using one of these programs. I have ways I have helped my clients in the past to write competitive offers contingent on getting their home under contract and sold first!