Ever heard of a RECAST?? Avoids the Chicken before the Egg predicament many home Sellers find themselves in when both BUYING and SELLING a home at the same time.
Little known technique to get the home you want WITHOUT selling yours first….
Our Lender friend Joe explains what a “Recast” of your loan is here in this short video with me.
But in a nutshell… Good homes go quick and a lot of our Selling clients worry about being homeless if we sell their home too fast and they haven’t found the home they want to buy yet.
Problem is, when I help them sell their home- IF they get more than 1 buyer interested in their home at the same time, my advice will always be to sell it to the person who doesn’t have to sell a home in order to buy theirs- just way less risk involved for the Seller.
So on the flip side, when our Sellers have a home to sell- if they qualify for a Conventional loan with recasting ability- they DON’T have to purchase contingent on the sale of their home, which puts them in a much better competitive position if the home they WANT TO BUY has someone else interested in it at the same time. What happens is you BUY the home you want, then you sell the old one and the equity you want to put on the new one, you’re still able to after the fact to lower your monthly mortgage payment.
OLD HOUSE sells for $300,000 and Seller has after loan is paid off and sale closes $75,000 to put down on the new home.
NEW HOME is bought with a minimal down payment, closes escrow… a couple of payments are probably made with the higher payment (just with the timing of the move and then marketing and closing of the old one), with a fee of a few hundred dollars- the Seller/Buyer can apply that $75k if they want to the new loan to bring down the payment where they are more comfortable.
Really the only catch is that the person doing this has to qualify for both payments for a couple of months- BUT if it gets them the new home they’ve been dreaming of- then it’s worth it not to lose out.
Sadly some can’t swing it- doesn’t mean we can’t still get the dream home- it’ll just take some more finagling on their part and patience to land the “1” and not have to do a double move… we have some clients right now that are Vets and sadly the VA doesn’t offer this option, so they are lining up a VRBO in case we can’t find the “1” right away, which a double move does involve some expense too. They just really can’t afford to do the Recast option since they are relying on their VA eligibility to purchase their next home too. FHA sadly doesn’t offer this option either…. BUT if you’re lucky enough to qualify for a conventional loan- please mention to your lender the RECAST option and see if it’s a smart move for you too!