Caught between two homes...in a down market?

Caught between two homes...in a down market?
by Kaushik Sirkar, Chandler AZ REALTOR
Chandler Arizona Real Estate

A big problem in many of today's Real Estate markets involves the "move-up buyer".  Who is the move-up buyer?  Well, I don't think there is necessarily any one definition that fits all.  But typically it will be someone or a family that already has a home.  They have decided they need more space, want a better school district or want amenities that the current home doesn't offer.  These people want to sell there current home and purchase a new one.  Often, they will have equity in the first home that is necessary for them to afford the new home.  Sometimes they won't but they will have extreme difficulty in carrying two mortgages for an extended period of time.

This topic has definitely been on my mind lately as I have a few clients and prospective clients in such scenarios.  What are some tips for them?  Well, luckily I read money.cnn.com and came across the perfect article!

Assuming one doesn't have a boatload of excess cash (ideally in the 6 figures in some highly priced markets) the two potential solutions discussed are a home-equity line of credit or a bridge loan.  If one hasn't already put their home up for sale, the equity line of credit may be the way to go.  Of course, this assumes that you have equity in your home to pull out!  If not equity...then consider the bridge loan.  It works, but its definitely more pricey.  In general, it is a 1 year interest-only loan designed to "cover the financial gap between buying a new home and selling the old one, using the older house as collateral."  Lots of fees and points with this option....and the NEED TO PAY TWO MORTGAGES!

The option that I like best and that the article also supports?  Sell your house first.  Lower the asking price (in some cases significantly) and/or make that home shine!

Thanks for Reading :)

Kaushik Sirkar, Chandler AZ REALTOR
Chandler Arizona Real Estate