BECOMING HOMELESS

By Michael L. Baker, Sr. Mortgage Loan Officer at Affinity Mortgage

Becoming homeless this Spring/Summer home buying season is a real possibility for many this year. Let me explain…

HOMELESS

The market is BOOMING for sellers right now not just in my home market of Kansas City but also in other great markets that I lend in as well like Denver, the Silicon Valley and any of the numerous suburbs surrounding Washington DC. I’ve made mention to this many times before but when Supply is LOW and DEMAND is high it skyrockets prices, starts bidding wars and ultimately means it is a LOT easier to sell a home than it is to buy a home.

I have several clients right now who have their current house sold or under contract and they have been making offers and getting outbid in this flaming hot market left and right. Or other clients who are currently renting and their lease is up in the next month or two. So the reality of being “homeless” is a definite possibility for these clients of mine.

Now I know they won’t truly be homeless. They’ll find a place to stay if they can’t get under contract on a new house soon enough, but nobody wants to move back into their parents basement, even for a shortened amount of time. Below are three practical tips you can use to make sure you aren’t left homeless this buying season.

DON’T BE TEMPTED TO LIST YOUR HOUSE TOO EARLY.

THREE TIPS TO STAYING AWAY FROM HOMELESSNESS

Tip 1: Don’t be tempted to list your house too early. In a hot seller’s market like we have now many folks will be tempted to get their home on the market and sold as quickly as possible for fear of the bottom dropping out of the market. I’m hear to tell you, unless EVERYONE and their BROTHER puts their house up on the market tomorrow, this isn’t going to happen. Inventories are at such a low level right now that Real Estate Agents are begging for anyone and everyone to put their homes up for sell.

So as much as you may want to hold off on putting your house up for sell too quickly.  If you don’t have another house in mind already or at least a neighborhood you are sure you want to be in, then you could be selling your home too quickly and that’s going to leave you homeless.

Tip 2: Buy your next house before your sell your current house. Wait what? That sounds crazy you say! However, for many people this is very real and ideal way to ensure that they are not left without a home.

Underwriting guidelines are making this easier than ever by even allowing folks to count rental income to cancel out their mortgage payment for those that don’t get their home sold or decide to keep it altogether and turn it into an investment property and still qualify for the new house they are buying.

If you have a good amount of equity in your current home you can even look into what some folks call a “bridge” or a “swing” loan to get the funds for your down payment before your current home sells if that is where a majority of your down payment will come from. You’ve probably heard of these loans as HELOC’s or Home Equity Line’s Of Credit. It is basically like using your house as a credit card. You go to a local bank or credit union and the give you a HELOC based upon how much equity they assess you have in your home, then you can use this HELOC as your down payment. Later when your current home sells the proceeds from the sale of the old house go to paying off the current first mortgage and the HELOC you used as your down payment.

When you are using a Conventional Loan you are even allowed to “recast” your loan after your old home sells.  Which means put additional down on the loan to lower the payment. This isn’t a full refinance, you keep the same great rate you have, you just use the additional monies gathered at the closing of the old house to pay down the principal on your new mortgage further, which in turn will lower your overall monthly payment.

Tip 3: Have a contingency plan. This is where you are going to turn away from this post and look at some other website because the idea of what I am about to say makes you nauseous to say the least. But you need a contingency plan.

Look around your city for short term rentals. There are many apartment complexes that will allow 3-6 months or even month to month. The monthly rent may be more than if you were signing a long term lease, but it’s a reality you’ll have to deal with.

Ask your parents to clean out the basement for you and remove all those mothballs.  This may sound frightening, especially if you have kids.  Packing into Mom and Dad’s basement for any amount of extended time could be a real kick to the you no what’s. But it might be your very best option.

Finally talk to your friends. Do you have a close set of friends that would absolutely be thrilled to have you move in for a bit while you are in limbo? You could share meal duties, have late night wine sessions and share the household chores and budget!

BE PREPARED

The moral of the story here is be prepared for anything. Assume in this hot market that your current home will sell in 24 hours (which is typical right now) and assume that you will STRUGGLE to find your next house. Assume that you will be outbid and you will have to write contracts on 3, 4, 5 or maybe even 10 homes before you find someone that will accept your offer. Assume that you may have to get super aggressive with your offer. Assume that you will have to live with your parents or in some short term (and less than desirable) apartment.

Prepare for the worst, and hope for the best.  Be realistic. Talk to your Realtor about the possibility of your home selling in 24 hours and what you will do to make your offer on your next dream home stick out among the rest.

If you have any questions or if you want to talk about your mortgage options when it comes to your next house feel free to call/text me at 913-735-5363. If you aren’t ready to talk just yet but want to learn more read more about me and my company, Affinity Mortgage or on Facebook or on Twitter.

Cheers!

Michael L. Baker
Affinity Mortgage
Call/Text: 913-273-5363
Email: [email protected]