Instant Equity

Instant Equity is an innovative loan product offered exclusively by JVM Lending that allows homeowners to access the equity in their current home before selling it. This product can either provide the necessary funds for a down payment or it can provide the full amount needed to purchase a new home all-cash. This allows buyers to move forward with a new purchase without waiting to sell their existing property.

When used in conjunction with JVM Lending’s EasyPath Mortgage Program, which waives the existing mortgage payment from the debt-to-income (DTI) ratio, homebuyers can seamlessly transition to their next home.

How Does Instant Equity Work?

This loan product allows you to borrow against the equity in your current home with a convenient loan program that does not require any monthly payments.

For people who are downsizing and have ample equity, there may be enough equity to purchase a new home all-cash and pay off this loan once the current home sells.

For move-up buyers, this program frees up the money needed for a down payment and removes the current housing payment from negatively impacting the loan approval on their new home.

In either case, clients have peace of mind because they do not have to worry about making payments on this loan and they have 120 days in which to sell their current residence.

Why Consider Using Instant Equity?

Instant Equity provides the financial flexibility needed to make a new home purchase before selling your current property. It increases your buying power by waiving the current mortgage from your DTI ratio, providing you with more cash-on-hand, and simplifying the transition to your next home.

This approach is especially beneficial when purchasing non-warrantable condos, which generally require an all-cash purchase or specialized and costly financing solutions. Alternatively, Instant Equity provides the funds upfront, leveraging the equity in your current home, so you can avoid having you go through traditional mortgage lending channels. This creates a streamlined underwriting process and allows you to capitalize on opportunities other buyers are missing.

Instant Equity Loan Details

Program is Best Used For:

• Providing liquidity to use as a down payment.
• Providing funds to purchase a home all cash.
• Eliminating any existing liens and replacing them with a no-payment option.
• Buying a non-warrantable property all-cash.

Costs:

• 9.99% simple interest note rate
• 2.5% Origination fee against a 1st lien; 3.5% Origination fee against a 2nd lien

Key Considerations:

• Departing residence must be under contract to be sold.
• Can use JVM’s EasyPath Mortgage Program to satisfy this requirement.
• No monthly payments due – simple interest accrues without compounding

Max Loan Amount/CLTV:

• 90% of Departing Residence Contract Amount up to $3,000,000

States Available:

• Arizona
• California
• Florida
• Georgia
• Idaho
• Massachusetts
• Oregon

How Instant Equity Works with the EasyPath Mortgage Program

The Instant Equity Loan is designed to be used in conjunction with the EasyPath Mortgage Program to streamline the homebuying process.

The EasyPath Mortgage Program provides homeowners with a ratified contract against their current home. This can be used on its own to strategically remove the current home’s mortgage payment from the DTI calculation on the new home purchase, making it easier to qualify for a new loan.

Clients can combine these programs together to borrow the funds they need for a new home purchase and not have the previous home’s payments harm their new loan approval.

Benefits of Combining the Programs

• Immediate Down Payment Funds: Instant Equity provides the funds needed for a down payment upfront before selling your current home.
• DTI Waiver: The EasyPath Mortgage Program waives your existing mortgage payment from the DTI calculation, enhancing your loan approval prospects.
• Specialized Financing: This combined approach allows you to purchase non-warrantable condos without traditional underwriting hurdles.
• Smooth Transition: Move into your new home without the financial strain of managing two mortgages simultaneously.

Case Study: Buying A New Home with Instant Equity

Background

Meet Alex, a savvy homebuyer who currently owns a single-family home with a monthly payment of $3,500. Alex wants to purchase a non-warrantable condo in a prime downtown location but faces challenges securing a traditional mortgage due to the condo’s non-warrantable status and the current mortgage outstanding.

Step 1: Get Pre-Approved with JVM Lending

Alex should first complete a loan application and receive a pre-approval letter from JVM Lending. This step is the most important as it ensures Alex is fully informed about the available loan options and is a requirement for proceeding with the Instant Equity Loan.

Step 2: Secure an Instant Equity Loan

With the pre-approval in hand, Alex can now apply for the Instant Equity Loan. Professional analysis reveals that the home is worth $600,000 with a remaining mortgage balance of $300,000.

If the home is under contract already, we can use the value of that contract to calculate the lendable amount. If it is not currently under contract, then Alex will obtain a contract from our EasyPath investor who provides an offer at 80% of the market value, or a $480,000 sale price.

The Instant Equity Offer will lend up to 90% of the contract value, leaving Alex with the option to borrow up to a total of $432,000, unlocking $132,000 in equity.

Note: The EasyPath investor’s contract will be cancelled once Alex receives a superior contract during the 120-day sale window.

Step 3: Utilize the EasyPath Mortgage Program

Alex has the opportunity to choose how to use the Instant Equity Loan based on her goals and comfort level:

1st Lien

Benefits:

• Completely wipes out and replaces her existing mortgage payment ($3,500) with a new loan of $432,000.

Costs:

• 2.5% of the loan amount = $10,800
• EasyPath Contract = $2,500
• 9.99% interest accrual = $3,600/month added to the loan amount (all paid off with final sale)

2nd Lien

Benefits:

• Minimize total interest and fees paid by only taking out a $132,000 2nd loan behind her existing 1st loan

Costs:

• 3.5% of the loan amount = $4,620
• EasyPath Contract = $2,500
• 9.99% interest accrual = $1,100/month added to the original loan amount (all paid off with final sale)
• Existing 1st Loan Payments of $3,500/month

If Alex chooses the 1st lien option, she will have the lowest monthly costs.

With the 2nd lien option, she will save on upfront costs but will have higher monthly expenses.

Step 4: Win an Offer on a New Home

With the pre-approval letter, Instant Equity Loan, and the benefits of the EasyPath Mortgage Program, Alex can confidently make a competitive offer on a new home with a larger down payment than she could otherwise.

Alex identifies a new home in her dream neighborhood worth $800,000, but knows she will be up against other bidders. Rather than making just a 5% down payment offer with the cash she had saved up, by adding in the money from her Instant Equity loan, she can make a competitive 20% down payment.

Step 5: Close on the New Home

Alex wins the offer on the home and uses the $132,000 from the Instant Equity Loan + her savings to make a 20% down payment. The remaining $640,000 is financed through a mortgage secured with the help of JVM Lending, ensuring favorable terms and a fast, smooth close.

Outcome Scenarios

Scenario 1: Successful Purchase and Instant Equity Gain

Alex successfully closes on the new home valued at $800,000, and because of her larger down payment, she has a lower monthly mortgage payment she feels comfortable with.

Scenario 2: Smooth Transition with Financial Flexibility

The EasyPath Mortgage Program and Instant Equity Loan provide Alex with the financial flexibility needed to manage the new home purchase and transfer the equity from her old home to her new one.

If she decides to proceed with the first lien option, she can also avoid the burden of making two monthly mortgage payments until her previous home sells.

Summary

In this scenario, Alex can confidently move forward with winning the bid on a competitive home by making a large down payment, backed by the innovative financial strategies provided by JVM Lending’s Instant Equity Loan and EasyPath Mortgage Program. The combination of instant approval, competitive rates, and expert guidance ensures a smooth and successful transition to owning a new home with significant instant equity.

Frequently Asked Questions

What is the Instant Equity program?

Instant Equity provides quick access to funds by lending against the equity in your current home, so you can use those funds as a down payment on a new home before selling.

Are there monthly payments on the Instant Equity loan?

No monthly payments are due. Simple interest accrues without compounding, and the balance is settled when your current home sells.

How does Instant Equity work with EasyPath?

EasyPath removes your current mortgage payment from your DTI calculation, making it easier to qualify for a new loan. Instant Equity then provides the funds needed for your new home’s down payment.

How much can I borrow with Instant Equity?

The Instant Equity loan can lend up to 90% of the contract value on your current home, minus any existing liens.

Your Next Steps

For homeowners looking to leverage their property’s equity to purchase a new home, JVM Lending’s EasyPath programs offer tailored solutions to meet your unique needs. Reach out to JVM Lending at (855) 855-4491 or hello@jvmlending.com for a consultation and start your journey to a brighter, more secure home-owning future.