As a listing agent, I’m often asked by clients if they can find their next home before they sell their current home. It doesn’t always make sense (for a number of reasons), but often moving up without moving out is an incredible option that an informed agent should discuss during a listing consultation.
A few years ago, I was meeting clients and we were sitting in their beautiful kitchen. They had a new baby, the husband worked from home, their older two children weren’t yet in school and they had 2 large dogs. Let’s say it was a busy household. They needed to sell their home quickly and gain more space! We discussed their wants and needs for their new home, and it painted a lovely picture: their next home would have all the updates, a finished basement, 3 car garage and large fenced in yard… but, they did not want to put their home on the market and risk selling before they had bought their next home. Their biggest problem though was that they needed the equity out of their current home to use as a down payment on their next home. What were our options?
Traditionally, most agents will help you focus on not putting the cart before the horse. That is, the focus will be to get your home listed and on the market before ever looking for your next home. Once you receive an offer and go under contract you are left a few days of house hunting and making offers on whatever home inventory is currently available. The problem is that it may not be your dream home and your offer will most likely be contingent on the sale of your current home as you need the funds from the sale as your down payment source. In a sellers market this is not an attractive offer!
Or… what if you can put the horse before the cart? There is what we call a “creative financing option” that allows you to move up without ever moving out! This solution allows you to find your dream home first, make a non-contingent offer, purchase your next home without ever listing or moving out of your current home! The solution to moving up without moving out is called a Re-Cast Loan. (Your lender will help determine if you qualify). In layman terms A Re-Cast Loan allows you to find the next home, put down a small amount (3-5%) on the purchase of the new home, locking you in to todays current interest rates, and securing you that Move Up home! Then you can list your first home and upon successfully selling you are able to take the equity that you needed and make a one time lump sum deposit into your new home. This will trigger a “re-cast” of the principal amount of the loan and effectively reduce your monthly payments without ever having to re-finance the home!
So…my clients a few years ago were able to implement the creative financing solution of a recast. They landed their next dream home…then sold their first home…and they moved up without ever moving out! Who do you know that is needing to move up but does not want to move out? Contact us at the Peters Company today and we will help you determine if the Re-Cast strategy is right for you and your family!
- Written by Scott Hamilton