Navigating Home Buying Before Selling
Buying a new home before selling your existing home can be a complex and stressful process. But what if there was a way to simplify this journey? JVM’s EasyPath Mortgage Program is a game-changing solution that offers a seamless path to buying your next dream home before selling your current one.
JVM’s EasyPath Mortgage Program: The Simple Way To Buy Before You Sell
What is the EasyPath Mortgage Program?
JVM’s EasyPath Mortgage Program is designed to help homeowners transition smoothly from their current home to their new one. This innovative program offers a unique approach of addressing the problem most repeat homebuyers face: qualifying for a new mortgage while they are still on the hook for their existing one.
Instead of adding more loans, debts or fees to the equation like most bridge solutions do, this program focuses on erasing the existing housing payment from your debt-to-income ratio (DTI), making it possible to qualify for a new home.
Program Highlights
- 120-Day Guarantee: Unlike other buy-before-you-sell programs, which usually offer 90 days, JVM’s EasyPath gives you a full 120 days to sell your home.
- Affordable Option Premium: At just $2,500, the program is more affordable compared to the high fees or rates charged by bridge lenders.
- Profit Guaranteed: You keep 100% of the profits if you sell in the first 120 days or 90% of the profits if sold after.
- Flexible Equity: You can have liens covering up to 75% of your home’s value and still qualify for this program.
The EasyPath Mortgage: How It Works
Erasing Mortgage Payments From Your Debt-to-Income Ratio (DTI)
Mortgage lenders are required by law to analyze a client’s ability to repay the new mortgage debt for which they are approved. This means carefully calculating the percentage of a client’s income that is being spent on servicing debt payments. This includes looking at debt expenses such as car loans, student loans, credit cards, and other mortgages.
This system creates a problem for buyers who plan to sell their home soon but haven’t yet sold it; if their current mortgage is still active on their credit report, lenders have no choice but to include it as part of their debt ratios. Oftentimes, this existing housing payment combined with the projected payments on their new home pushes their debt ratios far too high to receive loan approval.
This is where EasyPath’s ingenuity shines. The program strategically removes the mortgage payment of your current home from your DTI calculation. This means that when lenders evaluate your financial situation, the monthly payment on your existing home won’t count against you. Consequently, this significantly improves your chances of qualifying for a new mortgage, as it presents a more favorable DTI. It’s akin to having a financial clean slate, giving you the freedom to pursue the purchase of your new home without the existing mortgage holding you back.
The No Direct Lending Strategy
A unique aspect of the EasyPath Mortgage Program is that it doesn’t function like a traditional loan. You are not borrowing any money from the investors who offer this program. Instead, you are paying a relatively small and affordable fee in exchange for a guarantee that they will purchase your home in 120 days.
This guaranteed purchase contract allows our underwriters to treat the existing home as good as sold. This enables JVM to remove all payments related to that home from the debt ratios used to calculate the approval of your new mortgage.
Leveraging Your Home Equity Lines
If you need to borrow against your current home’s equity for a down payment on your new home, using a Home Equity Line of Credit, coupled with JVM’s EasyPath Mortgage, could be a cost-effective way to do so.
Because the EasyPath Mortgage solution will ignore all housing expenses related to the current mortgage, you will not be penalized for borrowing against that home.
However, for the EasyPath Mortgage investors to sign the contract for the purchase of your home, they do require a minimum 25% equity in the home. This means that you cannot borrow more than 75% of your home’s value to remain eligible for the EasyPath mortgage solution.
The 120-Day Selling Window: An Opportunity for Maximum Returns
Another appealing aspect of the EasyPath program is the generous 120-day window provided for selling your current home. This extended period is a significant improvement over the standard 90 days offered by similar programs.
This four-month period offers you the freedom and flexibility to market your home effectively, and to aim for the best possible sale price. You have the luxury to wait for the right buyer and the right offer and ensure you get top dollar for your property.
If, after the 120 days, your home hasn’t sold, the investor under the EasyPath program steps in to purchase the property. This is required so that you have not misrepresented anything on your mortgage loan application.
After the EasyPath investor purchases your home, they then work to sell your home to a 3rd party. Once they sell the home on your behalf, they will return 90% of the net profits back to you, protecting your equity and upside.
Example Buy-Before-You-Sell Scenario Using EasyPath
Background
Let’s consider a homeowner, Alex, who currently owns a home and has a monthly payment of $3,500. Alex wants to purchase a larger home for her family but is unable to receive mortgage loan approval with her current mortgage outstanding.
Current Financial Situation
- Current All-In Housing Payment: $3,500/mo
- Target New All-In Housing Payment: $4,500/mo
- Income: $10,000/mo
- Debt-to-Income Ratio (DTI): 80%, calculated by adding her $3,500 current housing payment + her $4,500 new housing payment and dividing that by her total monthly income of $10,000
- Maximum Allowed Debt-to-Income Ratio: 50%
- Currently, Alex’s DTI is 30% too high to receive loan approval
- With the EasyPath Mortgage Program erasing her current housing expense from the loan application, her DTI would drop to 45% and she could move forward with loan approval.
Step 1: Get Pre-Approved with JVM Lending
- Alex should first complete a loan application and receive her pre-approval letter from JVM Lending. This is not only a requirement for the EasyPath investor, it is the best way to make sure Alex is fully informed about her loan options.
Step 2: Receive an EasyPath Contract
- Once pre-approved and confident she is choosing the right program, Alex will apply for an EasyPath contract (with help from JVM Lending) that guarantees her new home will be sold within 120 days.
Step 3: Win An Offer on a New Home
- With both the JVM Lending Pre-Approval Letter and the EasyPath Contract in hand, Alex can start making offers on homes within the price range she is pre-approved for.
- Once she wins an offer and closes on her new home, the 120-day window to sell her previous property begins.
Step 4: The 120-Day Selling Window
- Alex lists the home on the market with an aim to sell for the maximum value. Depending on how long it takes for someone to purchase her home, there are 2 possible outcomes.
Outcome Scenarios
- Scenario 1: Home Sells Within 120 Days: Alex manages to sell the home for $750,000. The proceeds of the sale pay off her mortgage and any sale costs, such as transfer taxes and Realtor commissions. All remaining profits are returned to her.
- Scenario 2: Home Does NOT Sell Within 120 Days: The EasyPath investor steps in and purchases the home for the agreed-upon value, typically 75% of the market value. Then, the investor immediately puts the home back on the market to sell it to a third party. Once the home sells, the investor returns 90% of the net profits (after sale costs and Realtor commissions) back to Alex.
- If the net profits after sale costs are $75,000, Alex will receive $67,500.
Summary
In this scenario, Alex can confidently move forward with purchasing a new home, backed by the financial strategies and safeguards provided by JVM’s EasyPath Mortgage Program. She has low fees and a generous window of time in which to sell her home after purchasing her new one.
Alternatives To JVM’s EasyPath Mortgage Program
Buyers have several alternative options to consider when looking for ways to buy a new home before selling their existing home. Each come with various costs, both money and time, that should be carefully considered first in order to make an informed decision.
Below is a list comparing several popular solutions to JVM’s EasyPath Mortgage Program.
Bridge Loan
A bridge loan is a loan solution in which you borrow against the equity of your current home and use it towards purchasing your new home.
- Pro: Unlike JVM’s EasyPath Mortgage, a bridge loan will give you money to use towards a down payment, assuming you have enough equity.
- Con: The total costs of a bridge loan are multiples higher than an EasyPath Mortgage (roughly at least 10 times more expensive).
- Same: Both will allow underwriting to ignore the housing payment on the current home, freeing up a buyer’s debt ratios to qualify for a larger home.
Home Equity Line of Credit (HELOC)
A HELOC is a 2nd mortgage that sits behind your existing 1st loan and will allow you to withdraw just how much you need for a down payment, up to your approved limit. Think of this like a credit card that is tied to your home’s equity.
- Pro: This is a way to borrow against your equity to get the money you need for a down payment.
- Con: By itself, a HELOC will increase your debt ratios and will make it harder to qualify for a new home because you now have a new debt added to the DTI.
- Same: The fees for a HELOC are generally relatively low and affordable.
Pro Tip: If you have 25% equity in your home after pulling funds from a HELOC for a down payment, you can also use the EasyPath program to erase this payment and your 1st mortgage payment from your debt ratios.
Rent Out Your Current Home Rather Than Selling
If you are flexible with your plans for your old home, you might consider renting out your home rather than selling it.
- Pros: You can use 75% of the value of a signed lease agreement to offset your existing mortgage payment and reduce your debt ratios.
- Cons: Being a landlord is a serious job that takes time and effort, and using a property management company comes with costs, too.
- Neutral: This is also a relatively low-cost solution and you do not get any down payment funds with this option.
Write a Contingent Offer On Your New Home
A contingent offer is when you write your offer to buy your new home contingent (aka dependent) upon you selling your home first. If accepted, your old home must sell before you can close on your new home.
- Pros: You do not need to borrow money for the down payment or use any alternative solutions to reduce your debt ratios.
- Cons: Slow and drawn-out closing timeline (because you need to sell your home first). More importantly, these offers are viewed unfavorably by sellers and are generally not accepted in highly competitive homebuying markets.
- Same: You remove your current housing payment from your debt ratios by completely selling your home.
Which Is Right for You?
Each option comes with different pros and cons to consider, and our expert team is ready to help explore all solutions that might work for you.
Next Step: Take The Easy Path to a Smooth Home Transition
If the unique benefits of JVM’s EasyPath Mortgage Program have caught your interest and you’re considering this as your next step in the home buying and selling process, moving forward is straightforward and easy. Here’s how you can embark on your journey with JVM Lending to secure your dream home with ease and confidence.
Step 1: Initial Consultation and Information Gathering
- The first step is to get in touch with JVM Lending. You can do this via our website, phone, or even drop an email to [email protected]. This initial contact is your opportunity to express your interest in the EasyPath Mortgage Program and set up a consultation.
- During your consultation with our team, a knowledgeable and friendly JVM representative will guide you through the program’s details. This is your chance to ask questions, express concerns, and get a comprehensive understanding of how the program can be tailored to your specific needs.
Step 2: Evaluating Your Eligibility and Preparing Documentation
- After the initial consultation, complete a loan application so our team can assess your eligibility for the EasyPath program. This includes evaluating your current home’s value, your financial situation, and your goals for your new home.
- To streamline the application process, prepare financial documents such as your asset statements, proof of income, details about your current home, and any other relevant paperwork that will support your application.
Step 3: Personalized Plan and Program Enrollment
- Based on your consultation and the application information gathered, JVM Lending will craft a personalized plan that aligns with your home buying and selling goals.
- Once you’re ready, you’ll be guided through the process of enrolling in the EasyPath Mortgage Program with our investor to obtain your contract.
Step 4: Navigating the Home Buying and Selling Process
- As you search for the right home, JVM Lending will coordinate with your real estate agent to ensure that you have all the numbers and information you need.
- We also love to call listing agents on every offer you make to ensure they feel confident accepting your offer.
- Once you are in contract for your new home, we will be alongside you during the entire process to ensure a smooth and on-time close.
Step 5: Closing and Beyond
- Even after the deal is done, JVM Lending remains committed to its clients. We are available for any post-closing questions or assistance you may need.
- We also monitor your interest rates post-closing to make sure you always have the best loan available. And, if rates drop, we will offer to refinance you at no-cost with JVM’s Rate Drop Free-fi™.
Your New Home Awaits!
Taking the next step with JVM Lending is not just about moving into a new home; it’s about making the process stress-free, financially sensible, and tailored to your unique circumstances. With their guidance, expertise, and the innovative EasyPath Mortgage Program, your journey to your dream home is just a consultation away. Reach out to JVM Lending today and set the wheels in motion for a brighter, more secure home-owning future!
