Existing homeowners who want to upgrade or downsize are beset with objections relating to their “exit” home. Let’s explore some common objections and solutions.
Client’s down payment money is tied up in their exit home.
They don’t want to sell their existing home and then live in a rental until they find their home and complete the purchase. This means moving twice and living in a temporary home. A contingent offer may work, but homes in demand may not accept a contingent offer. New construction homes require earnest money and options deposits, which may preclude a contingent transaction.
Home Equity Line of Credit (HELOC) on the “exit property.” Pulling money out of the exit property can provide earnest money deposit and down payment funds for the purchase.
- Cross-Collateral (aka Bridge Loans) can provide a loan to purchase the new home (100% plus closing costs). Significant equity in the previous home is required, and when the exit home sells, some of the proceeds are applied to the new home’s loan, and the payment is re-amortized to reduce the payment. Re-amortization is a key feature because the payment is reduced by the balance being paid down. This is done without refinancing hassles or expense.
Investors need cash from their homes to buy other homes. Whether investors need to do rehab or they want to buy more properties, often their cash is already tied up in other properties.
Cash-out Refinance. This option allows for getting cash out of their investment properties one time. It is a good solution providing a fixed rate. Washington Federal can finance nine single-family properties (or 9 total doors if multi-unit) beyond the limit of 10 that Fannie Mae offers. This means investors can now have 19 financed properties.
- Home Equity Lines of Credit (HELOC) are now available for investment properties. This means investors can cycle their home equity line for investing in other homes for acquisition or rehab. Each time it is paid off and reused there are no more fees or qualifying.
Some clients have the money to buy the home. That is great, but when they sell, they want to pay down their new mortgage significantly to lower the payment.
Washington Federal is a portfolio lender and never sells its loans. For a fee of $250, the client can pay a lump sum on the mortgage of $10,000 or more and WAFD will re-amortize the loan to lower the payment. No rate change, no re-qualifying, and no refinance needed. This two-step scenario is very common, especially for relocations and retirees.
These make-sense solutions to common “fence sitting” objections can make the difference between a lead-changing from “fall-out” to “closing.”