By Mike Miles
For the past two years it seems the real estate market was built for speed. The tight inventory helped create the seller’s market where homes sold very quickly. That market has been slowly becoming more balanced and homes are staying on the market longer.
This puts the transition for those selling and buying in the spotlight.
I’m not going to pretend I’m an expert in real estate trends. I’ll leave that to the agents like Chad and Leah Taylor of the Taylor Made Team with Keller Williams. I will stick with my area of expertise and discuss how the balancing market can make the financial impact of buy a home seemingly more challenging.
Notice I said “seemingly”?
Let me set the table first with a hypothetical situation:
A family wants to sell their current home and buy a new one. With a seller’s market they had confidence they could sell their house quickly once they found the home they wanted to buy. This ability to have a quicker sale minimized the concern of accessing down payment funds for the new home.
In a balanced market this family’s home may sit on the market for longer which means they may not be able to wait for the sale proceeds to be available for use on the new home. One solution is for them to make contingent offers on new homes. However, this idea may not work because contingent offers are less attractive than non-contingent offers.
Another solution is a transition loan.
Fountain Mortgage’s transition loan is different than a bridge loan. Bridge loans have been around for a while but are losing popularity quickly because of the high rates and closing costs associated. The transition loan is a regular loan but has a re-cast component to it.
The simplicity of it makes it a superior option over a bridge loan. It’s a regular conventional loan with all the normal conventional lending guidelines applicable. The re-cast portion is the only added feature making it slightly different than a normal loan but there is little to no cost for it. Here is how it works; the buyer gets into a new home and then once he/she sells their old home they apply however much of the proceeds they want to the new loan and have the payment and balance re-cast or re-amortized to be what it would have been had they been able to have sale proceeds available from the beginning.
Call Mike and his team to learn more about how you can use the transition loan. It’s a great solution to both buyers and sellers.
This weekly Sponsored Column is written by Mike Miles of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268