If you're a South Jersey homeowner who has been thinking of selling your current home to move onto the next one, you should know: a non-contingent offer is likely your biggest chance of success when buying your next home.
When we say a "contingent offer" we mean your offer to buy someone else's home is only valid when you succesfully sell your own home.
This can raise red flags for those people who's home you want to buy. They might wonder "what if your home takes 6 months to sell, when we're looking to move within the next 3 months?".
That's a valid concern, which is why most real estate agents will implore you to figure out how you can go 'non-contingent'.
If it seems like an impossible feat, let’s discuss your options (and, realistically, your real estate agent and mortgage lender will be able to provide the BEST options for you, so contact them!):
Using a Bridge Loan
Since our market here in South Jersey has become so competitive for buyers, more and more homeowners are turning to bridge loan products to help them move.
A home bridge loan is a short-term financing product that is giving homeowners the flexibility to borrow money based off the equity available in their home.
There are many benefits of using bridge loans: naturally the main bonus is using the bridge loan to put in a non-contingent offer.
The application and underwriting process also tends to be a lot faster than other property-based loans, meaning you can make a move on the home you really want, quickly.
Most lenders require you to keep a minimum amount of equity in your property, so you cannot pull out everything in your home — in fact, a standard bridge loan allows you to pull out 80%.
It’s important to note there may be high fees that go alongside using a bridge loan, but many lenders are now offering benefits such as appraisal insurance. Be sure to talk to your trusted agent and lender about this!
Using a HELOC
A Home Equity Line of Credit is essentially a loan based off the equity you already have built up in your home. But, unlike a bridge loan where you have access to the funds immediately (and then you’re on a time crunch to pay it back using your home sale), a HELOC can sit there, waiting for you, until you need it.
This typically gives you a lot more flexibility than when using a bridge loan.
However... it’s important to discuss your plans with your lender as soon as possible, because a HELOC (unlikely a bridge loan, usually) will impact your debt-to-income ratio, meaning you may not be able to afford as much as you wanted on your next home.
The money you get from a HELOC can actually be used for a variety of purposes (and many people take out a HELOC for major home renovations) and you can use this equity in your favor to start a property portfolio, if that’s in your future financial strategy.
More and more homeowners are looking to do this in order to hang onto that 3% interest rate they have on their existing home, by simply renting it out to tenants.
But savvy homeowners are also using HELOCs as downpayments on your their home, making it a viable option if you’re just looking to sell and buy your next home, non-contingent, in a competitive sellers market.
What else?
There are multiple other Equity Unlock programs that a local mortgage lender might have available for you, so be sure to speak to them before making any applications online. If you want us to point you in the direction of one of our vetted lenders, send us a message.
Looking To Put In A Contingent Offer?
If you've decided that a bridge loan, a HELOC, or any other finance products won't work for you, don't fret; there are still ways of securing your next home.
At The JFKLiving Team we've successfully helped many clients put in contingent offers on homes when they were looking to upsize, downsize or relocate. Check out the link below for some strategies our clients have used when putting in a non-contingent offer:
📮 YOU SHOULD READ: PUTTING IN A NON-CONTINGENT OFFER
