Welcome to our Mortgage Minute series, where our partners over at Midwest Lending break down the particulars of home financing, and bring a personal touch to the lending industry, as only they can.
Do you remember what it was like to buy your first home? If it has been several years, you might be pleasantly surprised just how much easier it is today! The days of signing piles of paper while waiting weeks for a decision are over thanks to today’s online mortgage technology.
That’s not likely the only thing that will be different this time around, however. For this purchase, you’re also juggling the sale of your current property, while you shop for your next home. So how exactly does that work?
You may end up feeling like a juggler, with too many balls in the air. And while it will be a little more tricky than last time, rest assured that your Midwest Lending mortgage professional will do the heavy lifting for you.
Ideally, you’d want to use the equity from your first home as a downpayment for your new home, right? Passing those funds from one place to another would make this whole process a cinch.
Unfortunately, rarely will a transaction happen so seamlessly, and that’s partly due to market conditions. If you are in the market to buy your forever home, research your local real estate market first. Look at both the area where you are selling, and the areas you are considering your next purchase.
When considering the selling side, talk to your real estate agent about how long comparable properties have been sitting on the market. This information is useful for determining how to price your home competitively, while still making a reasonable profit. It is an easy trap to fall into, listing your home too high, only to drop it several times before you get an offer.
Considering the purchase of your new home, you’ll also want to research the market. Decide which areas you might want to purchase in — that way, when your current home is under contract, you’ll know precisely where to make your own bid. Of course, you’ll also want to have talked to your Midwest Lending mortgage professional ahead of time, so that you can be sure you are properly pre-approved for this new offer.
Regarding Contingency Offers
A sale and settlement contingency offer is when you use the proceeds from your current home to fund the purchase of your new home. Of course, this means that your offer is dependent on the sale of selling your existing home.
While ideal for you as the buyer, it’s not a very attractive deal for the seller of the home you hope to purchase. If another offer comes in from a buyer with a proper pre-approval letter and no contingency, they will often win the bidding war.
Sellers can even entertain other offers after they’ve accepted a contingent offer. In order to facilitate a “non-contingent” offer, you may want to consider a bridge loan.
A bridge loan is a short-term loan used until a person secures permanent financing, or removes an existing obligation. It allows the user to meet current obligations by providing immediate cash flow. Essentially, you agree to “rent” your current home. That way you can sell your home and still live in it for 2-3 months while you shop for your next home. While the option is not always available, it’s definitely worth looking into.
There are many moving pieces when it comes to buying a home. Luckily, you have a team available to take care of all the details. Your dedicated Midwest Lending loan mortgage pro will work with you and your realtor to make your next purchase quick and hassle-free. Contact us today to learn more!