Buying before selling a primary residence can present financial challenges. However, the Trailing Primary Residence Program offers a solution that increases your purchasing power and allows you to leverage the equity from your departing residence. In this comprehensive blog post, we will delve into the inner workings of the Trailing Primary Residence Program, its remarkable benefits, and how it can empower you to buy a new home easily.
How the Trailing Primary Residence Program Works
The Trailing Primary Residence Program is designed to exclude your trailing primary residence from debt-to-income (DTI) ratio, subject to certain criteria. To qualify for the program, your departing residence must have at least 30% equity, typically determined through a Broker Price Opinion (BPO) or 2055 appraisal. This equity becomes instrumental in unlocking the program’s benefits.
Listing your departing residence for sale before closing on your new loan is a crucial step. By excluding the trailing primary residence from your DTI calculation, you gain a competitive edge by securing a new purchase contract that is non-contingent on the sale of your current residence.
Utilizing Equity and Expanding Purchasing Power
One of the key advantages of the Trailing Primary Residence Program is the ability to leverage the equity from your departing residence. Through a cash-out refinance or a Home Equity Line of Credit (HELOC), you can utilize this equity as a down payment for your new home. The Loan-to-Value (LTV) or Combined Loan-to-Value (CLTV) ratio must remain below 70% upon completion to ensure compliance. This utilization of equity not only enhances your purchasing power but also eliminates the need for bridge financing, giving you the flexibility to pursue higher-priced properties.
By excluding the debt associated with your trailing primary residence from the DTI calculation, the program enables you to qualify for a mortgage without the financial burden of your current property. This substantially enhances your chances of securing favorable financing terms for your new home, as it improves your debt-to-income ratio and financial flexibility.
Trailing Primary Residence Program Benefits
The Trailing Primary Residence Program offers various benefits and features tailored to suit your specific financial situation and make buying a house more accessible. Here are important details to consider:
- Loan Sizes: The program caters to loan sizes up to $5 million, providing ample flexibility for borrowers seeking financing for higher-priced properties.
- Credit Score Requirements: Understanding that credit scores vary, JVM offers options for borrowers with limited or no credit history. The minimum credit score requirement for the program is 600, ensuring accessibility for a broad range of homebuyers.
- Collateral Types: The Trailing Primary Residence Program encompasses all collateral types, including non-warrantable condos, co-ops, condotels, properties with acreage, hobby farms, and mixed-use properties. This flexibility accommodates borrowers with unique property types, allowing them to leverage the benefits of the program.
Other Niche Loan Programs With JVM Lending
The Trailing Primary Residence Program is just the beginning. In addition to this remarkable offering, JVM provides a range of other niche loan programs.
ITIN Mortgage Loan: JVM understands the diverse needs of borrowers who do not have a Social Security Number but possess an Individual Taxpayer Identification Number (ITIN). Through the ITIN Mortgage Loan program, JVM provides financing options tailored to individuals with ITINs, opening doors to homeownership for a wider audience.
Bank Statement Mortgage Loan: For self-employed individuals and those with non-traditional income sources, the Bank Statement Mortgage Loan program offers a flexible alternative. JVM recognizes the unique financial situations faced by self-employed borrowers and provides mortgage solutions based on bank statements rather than traditional income documentation.
1% Down Payment Loan Program: JVM is committed to making homeownership more accessible, which is why we offer the 1% Down Payment Loan Program. With this program, qualified borrowers can secure a mortgage with just a 1% down payment, helping to overcome one of the significant barriers to entry into the housing market.
Whether you have an ITIN, are self-employed, or need alternative documentation for income verification, JVM has tailored solutions to ensure that you can achieve your homeownership goals.
Trailing Primary Residence ARM Product Features
- Maximum DTI: The program allows for a maximum debt-to-income (DTI) ratio of 50%, ensuring that borrowers have sufficient income to comfortably manage their mortgage payments.
- LTV and Loan Amounts: The Trailing Primary Residence ARM products offer up to 80% loan-to-value (LTV) for loan amounts up to $2.5 million. For loans up to $5 million, reduced LTV options are available. Borrowers can consult their mortgage specialist for specific LTV details.
- Amortization: The Trailing Primary Residence ARM products come with a 30-year amortization period, enabling borrowers to spread their mortgage payments over an extended period and potentially reduce monthly payments.
- No Prepayment Penalty: JVM firmly believes in providing borrowers with the freedom to pay off their mortgage ahead of schedule. Therefore, the Trailing Primary Residence ARM products do not carry prepayment penalties.
- ARM Caps and Index: These ARM products feature 2/2/6 caps, a 1-year GMT Index, a 3.0% Margin, and a Floor set at the Note Rate. These provisions ensure rate stability and protection for borrowers throughout the loan term.
- Qualification and Escrows: Borrowers qualify for the Trailing Primary Residence ARM products based on specified start rates, which differ depending on the ARM term selected (7/1, 5/1, or 3/1). Escrows are generally required for these mortgage products, allowing borrowers to include taxes and insurance in their monthly mortgage payments for added convenience.
Questions? Contact JVM Lending!
Are you ready to unlock the full potential of the Trailing Primary Residence Program? Or do you have questions about any of our other specialized mortgage financing options? Look no further – our team of experts is here to help!
At JVM Lending, we pride ourselves on our deep industry knowledge and personalized approach to home financing. We understand that every homebuyer’s situation is unique, and we are committed to providing tailored solutions that meet your specific needs.
Don’t hesitate to reach out to us with any questions or to discuss your home financing goals. We are here to provide expert advice, clear explanations, and a seamless experience from start to finish.