If you ever had a move-up buyer who needed 100% financing, believe it or not, such a program exists. In fact, there are many solutions to help your buyer buy now and sell their existing property after their purchase. And yes, we’re talking about solutions beyond expensive bridge financing. The following is a great example.
Our client owned a $2M property free and clear. He wanted to buy a new home for $3M. However, with his current residence being his largest investment, his assets were tied up in the home’s equity. He needed to access the equity in his house and didn’t want to pay for an expensive, short term bridge loan. Fortunately, we have a loan program that combines the value of both a client’s existing residence in conjunction with the new property purchase! This program is called cross collateralization. The following worksheet best illustrates how this works:
Referring back to our example, the borrower owned a $2M home and wanted to upgrade to a $3M home, which is $5M in combined equity. Using the cross collateralization program, we were able to loan the borrower up to 70% of the combined equity, which is $3.5M. In other words, we provided 100% financing on the new property using the equity in the borrower’s current residence!!!