James and Kelsey, a couple, currently own a modest home and are eager to move into a larger, more expensive home they recently found with their Realtor. However, they faced a significant hurdle: they lacked the liquid cash necessary for the down payment on the new home.
Challenge
James and Kelsey needed to secure the down payment for their new home without having immediate access to liquid funds. Their existing home’s equity was substantial, but they needed a way to leverage it effectively without rushing to sell their current home immediately.
Solution
After consulting with Jason Hill of Hill Mortgage, a cross-collateral loan was identified as the ideal solution. Here’s how it worked:
- Utilizing Existing Equity: The equity in James and Kelsey’s current home was used as collateral for the down payment on their new home.
- Purchasing the New Home: With the cross-collateral loan, they could secure the down payment and purchase their new home without any contingencies or immediate payments.
- Time to Sell: This arrangement allowed them to move into their new home and take their time selling their existing home.
- Paying Off the Loan: Once their current home was sold, they used the proceeds to pay off the cross-collateral loan. The remaining funds were then applied toward the principal balance of their new home loan.
Outcome
James and Kelsey successfully moved into their dream home without the stress of immediately selling their existing property. They were able to leverage their home’s equity efficiently and smoothly transition into their new living situation.