By Shannon Schulz, Associate Broker at Tomlinson Sotheby’s International Realty
Many home buyers and sellers are finding themselves in the same boat where increased interest rates have made it harder to buy their next home. Cathy Pizzini, Senior Lending Manager at Evergreen Home Loans, and Shannon Schulz, Associate Broker at Tomlinson Sotheby’s International Realty, discuss the SteupUp Loan with Debt Elimination Strategy.
Q: I have several clients that may benefit from your StepUp loan. They have a low interest rate on their current loan, they need a bigger house, and are concerned they can't afford the payments with the higher interest rate. How can you help them?
A: Low interest rates are causing people to feel 'stuck' in their current home. They need/want to move yet fear higher interest rates, and home prices make it impossible. StepUp offers a way to transition to the new home with a similar overall monthly debt load.
Tell me more ...
We provide temporary financing so you can purchase the new home, without a home sale contingency. When your current home sells, permanent financing with Evergreen is secured. The goal is to sell your current home, pay off your debt and get you into a new home with your monthly overall expenses remaining about the same.
Q: Who is this program designed for?
A: It is specifically designed for someone who owns a home, has some equity in that home, has some debt they would love to pay off AND really wants to move into their new dream home without raising their outgoing expenses. It's a win-win.
Q: Would a buyer be making a contingent offer on the new home?
A: No. Our StepUp loan SPECIFICALLY eliminates the need for a contingent offer.
Q: How quickly can we close?
A: StepUp allows closing as early as 14 days, and no appraisal is needed.
Q: Does this cost a lot more than normal financing?
A: Since we are closing two loans (the temporary StepUp loan AND the permanent loan), there are some additional costs. They end up being minimal compared to the benefit provided.
Q: How is it different than other mortgages?
A: Evergreen's exclusive StepUp loan is a short-term loan held at our bank, giving us flexibility in how we underwrite the loan. Normal financing doesn't allow lenders to ignore current house payments, car loans, credit card debts, etc. Our program allows us to ignore the current house payment and the current monthly debt payments.
Q: What are the general requirements for this loan program?
A: 10% down (can come from a bridge loan on your current home), a 680 credit score, and 6 months 'reserves' of the mortgage payments.
Q: What are the tax advantages of this program?
A: You should consult your CPA on this. It is my understanding that mortgage interest is tax deductible. Credit card, vehicle loan and other consumer debt is not.
Q: Does this program work if my current mortgage rate is super low?
A: Yes. The idea is, if you have a house payment, car payments and credit card debts with a total monthly debt load of, say, $3,800, we may be able to get you into that dream home, pay off your other debts and set you up with a similar payment on a new home you want to live in!
Q: Sounds complex and a little outside 'the box.' What's the first step?
A: Call me! We work with these scenarios daily, and we can tell relatively quickly if it's a good fit for a buyer.
Cathy Pizzini
Senior Loan Manager
NMLS # 205704
208.263.5300
Evergeen Moneysource Mortgage Company dba Evergreen Home Loans NMLS 3182, EHO. Restrictions apply; please consult Evergreen Home Loans for program specifics.
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