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Property A is for sale, paid for. The owner wants to purchase a new home B and the owner of B has already closed on home C and is ready to move.
What are some ways for the owner of A to commit to buying B without getting a mortgage or bridge loan? The proceeds from A will be used to pay for B, but A could find some cash for a hefty deposit.
I may interpret this wrong but sounds like a person is interested in buy a home from a seller that wants to close quickly since they have a new place already. This buyer wants to put and offer but don't want contingency of selling their paid for current home. Without a bridge loan, not sure how you can do a purchase without a new mortgage or contingency.
Can't A pay off a mortgage or bridge loan once Property A is sold? I know people who have done that when they had 100% equity in their property and knew they'd net enough to pay for the 2nd property in full but they didn't want wait to buy Property B and risk losing it.
Can't A pay off a mortgage or bridge loan once Property A is sold? I know people who have done that when they had 100% equity in their property and knew they'd net enough to pay for the 2nd property in full but they didn't want wait to buy Property B and risk losing it.
Yes one can pay off mortgage or bridge loan once house A is sold but it cost money to get a bridge loan or mortgage. I think this is why OP is looking ways around it.
Not sure how much house A is valued and how much house B cost but would a large CL cover it? If so, you should have gotten a large CL months ago.
When I put CL, I mean to say line of credit on paid off home. That's the first thing I do with my rental property that is 100% paid off. Get about a 50-60 percent line of credit on it and tap whenever I need cash to buy another property.
"A" could make an offer to purchase an Option to Purchase from "B"
I was going to say "Option to Purchase", too. I've paid for Options to secure properties while giving me enough time to line up the cash to make the purchase. I've structured the deals so that the payment for the Option is applied to the purchase price in the event the Option is exercised. Of course, if you don't buy in the time allotted, you lose whatever you paid for the Option. (I've usually paid $10K for 3 to 6 month Options--enough to entice them into the deal, but not so much for me to incur undue risk. Before paying for an Option, I've always been certain that I would be able to close; and in some cases I had the right to extend the Option for another 6 months upon making another nonrefundable payment, still credited towards the purchase price.)
Another avenue might be to simply buy it on Land Contract (aka Contract for Deed, or whatever it might be called in your state). As long as the Sellers are willing, you can make it so payments are deferred (as opposed to monthly); you can write your own terms; you can call for a balloon payment once your house sells--and/or within a certain time frame, etc. If they don't need the cash and would like to entertain longer-term owner financing, they may even be willing to carry the contract through the entire amortization period.
Another alternative--though less likely with a knowledgeable Seller--would be to buy the property with the Sellers taking back a mortgage. The terms could be negotiated just like in a Land Contract.
For all of these alternatives, you really need to be sure that you will be able to fulfill the terms of the agreements--otherwise you'll be out some money and you'll just be causing headaches for all involved. It is also important to do all of the due diligence that you would in a normal purchase--especially checking the title. Too many owner-financed deals go sour because one side or the other didn't know what they were doing. Consulting with an experienced real estate attorney is always a good idea if you pursue any of these alternatives.
Hooray jackmichigan! Those are very excellent ideas and thank you for expressing them. And sj, your idea makes great sense too, although it would carry some loss with it (interest payments) so it might not be a first choice.
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