No. of Recommendations: 1
The three top scenarios are thus:

1. Take your present home OFF the market and take out a HELOC. Drawbacks: might take 2-3 weeks to fund. Your home will lose precious marketing time. You will be making payments on this loan until it is paid off, in addition to the payments on your new home. Benefits: No closing costs, low interest rate.

2. Leave your home on the market and take out a bridge loan. The lender I use makes loans a point or two above FRM 30-year rates, but there are no payments for four months and it's IO. Fees are $750 as it's funded in-house to a certain price point. Drawbacks: More expensive than a HELOC, more pressure on seller to sell within four months. Benefits: No payments, fast cash.

3. Buy your new home with 100% financing. Drawbacks: higher closing costs, higher initial payments until owner pays down or eliminates loan(s). Benefits: Leaves present home untouched.

This is off the top of my head, and this morning I have a cold that's settling in for the long haul. I can't tell you which is better for your situation because it depends on more factors than you have listed in your post.

Over the past year, I've had clients do all three of those options. With option #1, I've written purchase contracts with 20% down (to get the offer accepted) and then gone back and amended the contract to show all cash, contingent on HELOC funding. Seems to work easiest this way with sellers and listing agents because there is no contingency going into the transaction, and I insert the contingency when the HELOC has been approved.

However, bridge loans have worked well when we knew the seller's property would sell quickly, but the seller wanted to jump on the property she wanted to purchase right now. Bridge loans have funded in 2 to 3 days. Although I've never had a client run past the four-month period of no payments, I've heard that the no-payment option can be renegotiated at the end of that period. Perhaps Catherine could give you more information about that type of loan.

In any case, it' s not as much of a dilemma as you might think.

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