Author: Jay Hurst, Co-Founder of Hurst Lending
What is a Buy Before You Sell Mortgage?
A Buy Before You Sell mortgage is a short-term loan designed to help homebuyers purchase a new property before selling their existing one. This type of financing factors in the equity you have in your old home and allows you to qualify to purchase a new home before your old home sells. By doing so, it eliminates the need to wait for the sale of their current home to close before they can purchase their new one.
Benefits of a Buy Before You Sell Mortgage:
Convenience: One of the most significant benefits of a Buy Before You Sell mortgage is the flexibility it provides. This type of loan allows homebuyers to make a non-contingent offer on their dream home, increasing the likelihood of their offer being accepted in a competitive market. It also gives them the freedom to move into their new home immediately, without the stress of having to find temporary housing or worry about coordinating the closing dates of both properties.
Financial Flexibility: A Buy Before You Sell mortgage typically requires interest-only payments during the loan term, which means that the monthly payments are more manageable than if the buyer had to pay two full mortgage payments simultaneously. Once the existing home is sold, the proceeds from the sale can be used to pay off the bridge loan, or refinance the bridge loan to more favorable terms, leaving the homeowner with just one mortgage on their new property.
Example of a Buy Before You Sell Mortgage:
Consider the following example: John and Jane Smith currently own a home valued at $300,000, with a remaining mortgage balance of $150,000. They’ve found their dream home, listed at $500,000, and need to act quickly to secure the property.
John and Jane apply for a Buy Before You Sell mortgage, which allows them to acquire the new property without selling the existing property ahead of time with limited cash out of pocket. Once the existing home is sold, the borrowers are able to refinance the Buy Before You Sell loan, using the proceeds from the sale of their existing home, to favorable financing terms, effectively transferring some or all of the equity from the exit home into the new home.
The Smiths are now able to make a non-contingent offer on their dream home, increasing their chances of having their offer accepted. Once they sell their existing home, they will use the proceeds to pay off or refinance the bridge loan, leaving them with just one mortgage on their new property.
A Buy Before You Sell mortgage is an excellent option for homeowners looking to purchase a new property without the stress and uncertainty of selling their current home first. This type of financing provides convenience and financial flexibility making it an attractive solution for those navigating the complexities of buying and selling simultaneously.
Hurst Lending is an experienced buy before you sell lender and we can help guide you through this process and secure the right loan for your needs. Our knowledgeable team understands the intricacies of the real estate market and can provide tailored solutions to ensure a seamless transition between properties.
In conclusion, a Buy Before You Sell mortgage can be the key to unlocking your dream home without the burden of waiting for your existing property to sell. By partnering with a trusted buy before you sell lender like Hurst Lending, you can navigate the process with confidence and ease, ensuring a positive experience for all parties involved.
- Hurst Lending: https://www.hurstlending.com/
- Investopedia – Bridge Loan: https://www.investopedia.com/terms/b/bridgeloan.asp
- NerdWallet – Bridge Loans: https://www.nerdwallet.com/article/mortgages/bridge-loans
- Bankrate – How Do Bridge Loans Work: https://www.bankrate.com/loans/personal-loans/what-is-a-bridge-loan/
- The Balance – Pros and Cons of Bridge Loans: https://www.thebalance.com/what-are-bridge-loans-1798411
About Jay Hurst
In addition to being one of the founders of Hurst Lending, I am also a financial planner. I have been helping our customers buy, sell, and refinance their homes since 2006. Our suite of industry-leading offers helps solve many common situations faced by homeowners and real estate investors. Have you ever experienced the frustration of trying to buy before you sell; Losing your dream home in a bidding war; Trying to obtain a No-Seasoning Cash-out loan; Being unable to get a mortgage because your new or old house needs modest repairs; or simply because you prefer using our funds to close quickly without having to liquidate other investments? Our Industry-leading suite of short-term loans solves these issues. We also offer a suite of real estate investor loan products and a full suite of conventional, VA, FHA, construction and traditional home loans.
Please feel free to contact me directly if I can help provide a loan for your next purchase or refinance, or even if you just want advice on how to get started or expand your real estate investing activities.
Co-Founder, Hurst Lending
*Disclaimer: This article is intended for informational purposes only and does not constitute legal, financial, or professional advice. Consult with a licensed professional before making any financial or real estate decisions.