So you want to buy a better house AND you’ve saved your down payment, but I don't want two mortgages. I mean absolutely don't want two mortgages! First of all let me say congratulations!! Really nice work. It is hard to save a down payment for your next home when you're already making a mortgage payment and food and maintenance costs and all that, that comes with home ownership. So congratulations to you. If you already have your down, but you don't want to have two mortgages, let's take a look at the options that are available for you. There are five ways that you can buy your home when you already have your down payment. Even if you don't want two mortgages.
Buy as a second home
You can buy your next home as a second home. Now there's some guidelines on this, but you can purchase your next home, your dream home as your second home and put down as little as 10% on that property. Now here's the catch. I mentioned that right away, there is a catch. You do have to be a certain distance from your current home. Different lenders have different guidelines. But also I found that there's some workarounds for this too. For example, if your next home or your second home is closer to work, or maybe you're working from a home office now and it's better suited for telecommuting, that it's closer to. For example, my son is going to college. So I could purchasing a home that is actually only about 20 miles away from my current home because it was right next to his community college. You can also purchase that as a vacation property. If you're moving a great distance, this is a fantastic way to go. And then right when you're have made an offer on your second home, your next home, you can put your current home on the market, sell it and be ready to move forward. Or maybe you will love having a second home and just decide to keep it! Congratulations investor! 😊
Buy and Build
The next option we have is buy land and build. This can be a great way, I had one of my clients this summer use this with great success. They bought a piece of property and sold their current home. They then logged the property that they purchased and use that to start their construction of their new home. Now they're living in their RV for a few months, but they're more than happy with that. In fact, I keep pictures of them and their kids enjoying their new property. They bought 10 acres and have a bunch of land there to roam around on. So that can be a fantastic way to go, to get your dream home, exactly what you're looking for.
Hard Money Lenders
Use a hard money lender. I know that sounds a little bit scary. Some people call them a loan shark. You probably seen them on movies and such but hard money lenders are actually a great option. There's a lot of them out there. A lot of the times, people who are investors will also be hard money lenders. So they're out searching for properties for themselves, and then they'll finance other people purchasing properties too. Now they're not going to qualify you based on whether or not you already own a home like the bank will. They're just going to qualify you on whether or not you have the down payment. And some of them will look at the home that you're purchasing to make sure that they feel like you're paying something in line with value. Anticipate paying 15% down and paying a hefty interest rate. This is something you're going to want to use in the short term. Interest rates can be quite heavy duty with a hard money lender, but it will get the job done. I've done it many times myself and it works really, really well. After the sale of your current home you can refinance and pay the hard money lender off so you can have a reasonable interest rate long term.
Buy and Rent Out Your Current Home
A fantastic option. Another of my past clients bought a farm and this is exactly what they decided to do. They were able to rent out. They bought their home back in 2017, for close to half the price that it is valued at today. The payments on the old house were extremely low. So they decided to rent out their current home. They cash flowed making a nice profit every month and bought their new home. In fact, once you factored in their new house payment with the cashflow they got from their old home, their current home, they were paying a very reasonable mortgage payment while living their dream at the farm! If you have it professionally managed and it can be a really hands-off situation if you already have your down payment. Oh, and the lender is going to use that rent that you'll receive on your current home towards your income., so your chances of qualifying for your new home are even better. So yeah, don't be afraid of exploring that with the lender and seeing if that's going to work for you. Really good option.
Have the owner of your dream home or the seller of your dream home finance it. Some sellers are more than happy to finance it. They'll act as the bank. So instead of paying a bank, you will give them the money down and you will make payments to them. Now there's a way to set this up so that you don't get yourself in trouble. Use a trust accounting service. The trust accounting service will accept the payments from you. In fact, you make the check out to them, to the accounting firm, and then they will pay the mortgage that the current owner or the seller has on the property. Unless they own it outright. But they'll make sure that the mortgage gets paid and then they'll pay the seller the difference.
So if you are able to save a nest egg to buy your next home it can greatly ease the transition into your new home. Use one of these options to purchase your dream home or to add to your real estate portfolio. If you would like to meet with a professional to strategize how you can buy your next home with ease call Homematch NW, Inc. 425-359-0181.