4 Strategies to Buy a Home Before Selling Yours
webadmin • May 26, 2024
4 Strategies to Buy a Home Before Selling Yours
Navigating the current housing market can be daunting, especially with tight inventory and rising demand. Many homeowners face the dilemma of whether to buy a new home before selling their current one. This guide explores four practical strategies to help you buy your next home without the stress of being temporarily homeless.
Buying a new home before selling your current one is a strategic decision that depends on your financial situation and goals. Whether you choose a HELOC, the Luminate Cash Buyer Program, a bridge loan, or renting out your current home, each option has its own advantages and considerations. Evaluate your needs carefully to select the best approach for a seamless transition to your new home.
Ready to explore your options for buying a new home before selling your current one? Contact Luminate Home Loans today to discuss the best strategy for your financial situation and goals.
1. Home Equity Line of Credit (HELOC)
A Home Equity Line of Credit (HELOC) leverages the equity in your current home to finance the purchase of a new one. This option requires a solid income, sufficient equity, and good credit—typically a score above 680. HELOCs offer up to 90-95% combined loan-to-value, depending on the lender, and are tied to the Prime Rate plus a margin.Pros:
- Affordable and Simple: Often free to obtain with straightforward qualification.
- Access to Cash: Provides significant funds for your new home purchase.
- Interest-Only Payments: Manageable monthly payments.
Cons:
- Processing Time: Can take a while to secure.
- Qualification Impact: May affect your ability to qualify for a new mortgage.
2. Making You a Cash Buyer
We’ve crafted a solution that turns you into a cash buyer, enhancing the appeal of your offer and giving you a competitive edge. The Luminate Power Buyer Program eliminates the common obstacles with traditional financing, such as mortgage contingencies and extended closing times.Pros:
- Competitive Edge: Cash offers are more attractive to sellers.
- Simplified Process: Avoids the complications of traditional financing.
- Faster Transactions: Allowing you to buy your new home before you sell your exiting home (in as little as 14 days).
Cons:
- Power Buyer Fee: There is a fee for the use of the funds and interest accrues until you close your long-term financing.
3. Bridge Loans
Bridge loans offer a temporary financial solution, allowing you to use the equity in your current home to purchase a new one. Our preferred bridge loan option lets you borrow up to 75% of your home’s value without immediate payments, provided you sell your home within seven months.Pros:
- Substantial Funds: Access to significant cash for your new home.
- No Immediate Payments: Easier to qualify for a new mortgage.
- Quick Process: Close in as little as 14 days.
Cons:
- Costs: Fees of 2.3-2.4% of the loan amount.
- Equity Requirement: Must have a 25% equity cushion post-loan.
4. Renting Out Your Current Home
If you can afford to, renting out your current home can be a smart financial move. Keeping your home as a rental provides a steady income and multiple inflation hedges. Future rental income can also help you qualify for a new mortgage.Pros:
- Retain Low-Rate Mortgage: Keep the benefits of your existing low-rate mortgage.
- Inflation Protection: Homes and rental income generally rise with inflation.
- Additional Income Stream: Generate rental income.
Cons:
- Landlord Responsibilities: Managing tenants and property upkeep.
- Financial Risk: Vacancies can impact your finances.
- Qualification Challenges: Future rental income may not fully offset your current mortgage payment.
Buying a new home before selling your current one is a strategic decision that depends on your financial situation and goals. Whether you choose a HELOC, the Luminate Cash Buyer Program, a bridge loan, or renting out your current home, each option has its own advantages and considerations. Evaluate your needs carefully to select the best approach for a seamless transition to your new home.
Ready to explore your options for buying a new home before selling your current one? Contact Luminate Home Loans today to discuss the best strategy for your financial situation and goals.
Here at Luminate Home Loans, we’re always looking for ways to offer more value to our clients and partners. That’s why we’re thrilled to announce that we’re now a wholly owned subsidiary of Luminate Bank®—and soon, we’ll officially transition under the Luminate Bank® name.
For years, homebuyers have been hoping for a return to the ultra-low mortgage rates seen during the pandemic. But as we move through 2025, it’s becoming increasingly clear that today’s rates—hovering between 6% and 8%—aren’t going anywhere.
Luminate Bank® Welcomes Josh Eifert as Chief Financial Officer, Honoring Legacy of Dave Turk [Minneapolis, Minn.] – [2/4/2025] – Luminate Bank® is proud to announce the appointment of Josh Eifert as its new Chief Financial Officer, succeeding Dave Turk, who has played a pivotal role in shaping the company's strong financial foundation. Josh brings a wealth of experience and strategic vision to Luminate Bank, with 26 years in the banking industry. Most recently, Josh served as CFO at Tradition Capital Bank in Edina, Minnesota, where he led the financial strategy during its remarkable growth from $300 million to more than $2.5 billion in total assets. Before his tenure as CFO, Josh contributed to Tradition Capital Bank in other key financial roles. He began his career with Norwest and Wells Fargo Banks, gaining extensive expertise in financial and operational capacities. Luminate Bank's leadership transition reflects the company's thoughtful succession planning, ensuring its financial strategies remain robust and forward focused. Under the leadership of Dave Turk, Luminate Bank has built an exceptional financial infrastructure, delivering consistent results and creating a foundation that positions the company for continued success. Luminate Bank's CEO, Marc Campbell, shared his confidence in the appointment: "Josh not only brings exceptional financial acumen and strategic insight to Luminate Bank, but he also embodies the principles that define our organization: integrity, innovation, and a steadfast commitment to excellence," Luminate Bank's CEO, Marc Campbell, shared with confidence. "His leadership will ensure our financial strategies succeed and inspire confidence across all who depend on us." "I am honored to join Luminate Bank at such an exciting time. The company's remarkable history of financial excellence and its forward-thinking approach align perfectly with my values and vision," stated Josh Eifert. "I look forward to collaborating with the talented leadership team to build on this strong foundation and drive continued success for our customers, employees, and stakeholders." Josh graduated from the University of Minnesota with a degree in finance and completed the Graduate School of Banking at Colorado. CEO Marc Campbell expressed gratitude for retiring CFO Dave Turk's contributions, saying, "Dave has been instrumental in positioning Luminate as a financial leader. His dedication, insight, and stewardship will always be a part of our company's legacy." Josh Eifert will officially assume his role on February 18, 2025. About Luminate Bank® At Luminate Bank, We Open Doors—empowering individuals and families to achieve their financial dreams through personalized service and innovative digital solutions. As a nationwide bank headquartered in Minneapolis, Minnesota, we are committed to helping our clients meet their financial goals with a blend of modern technology, traditional values, and the trusted guidance of experienced professionals. Known for our exceptional commitment to customers, we take pride in delivering a seamless, supportive experience for every step of the journey. Our dedicated mortgage division has branches and a team of loan originators across the US, making expert home financing solutions accessible to communities nationwide. Luminate Bank is committed to safeguarding your money and accounts with FDIC insurance coverage up to applicable limits. Learn more about how we can open doors for you at www.luminate.bank , follow us on Instagram, LinkedIn, and Facebook, or call (952) 939-7200. For media inquiries, please contact: Debbie Schwake, CMO debbie.schwake@luminate.bank
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