It’s hard for anyone to get a mortgage and buy a home these days, but it’s sometimes harder for folks who already own their homes to get their next home. However, that’s where Calque has stepped up to the plate with a new product called The Trade-In Mortgage.
“It’s crazy when you think about the fact that you have a bunch of net worth that’s trapped in your current home,” Jeremy Foster, chairman of Calque, told NMP.
The Trade-In Mortgage is a new solution designed to help homeowners succeed in home buying and selling. It enables homeowners who have equity in their current property to use that equity to make non-contingent offers, finance, and move into their next home before they sell their current house.
“In a seller's market, a non-contingent loan or a cash offer is more likely to close than a contingent loan,” Foster said.
Additionally, the existing home is not counted in debt-to-income when the new loan is being underwritten.
He said that’s why they made the process easy for buyers to get a non-contingent offer by using the equity in their current home without losing the value in the sale of their first home.
“The consumers who need to use this service aren’t rich to begin with,” Foster said. “Or they wouldn’t have this problem.” He said they give the borrower four months to replace them as the buyer, at a much lower cost than other programs, which typically buy homes for a discount and then flip them for a profit.
He said The Trade-In Mortgage is a “real binding agreement.”
“We then give the consumer four months to replace us as the buyer,” Foster said. “If it doesn’t get sold to someone else we’re going to buy it.”
He said 94% of the time it gets sold to someone else, instead of being sold to the company. He said the borrower gets market value for it and they pay Calque a fee which is typically less than what they’re going to be able to save by making a non-contingent offer.
He said borrowers could lose $30,000 to $50,000 if they sell their home to a powerbroker company that turns around and flips it for a profit.
He said loan originators who use The Trade-In Mortgage typically charge about $5,500 for this service.
A homeowner can borrow the money from the equity they have in their departing residence, move into their next house, and start making mortgage payments immediately. The equity is used to make the tax and interest payments on the departing residence, and then when the home sells it all clears the way it typically would clear, Foster said.
“The Trade-In Mortgage allows us to provide a creative lending solution for our clients allowing them to tap into the substantial equity from their current home in order to purchase their next home,” Ryan Leahy, regional president at Leahy Lending, said.
Leahy Lending, which operates throughout Texas, has identified Austin, Dallas, Houston, and San Antonio, as the initial locations to launch this program. Austin is a purchase-driven market with thousands of pre-qualified borrowers looking for their next home. For homeowners considering their next purchase, the ability to leverage a strong equity position to acquire a home as if they were buying with cash, is a powerful proposition.
“Calque identified Leahy Lending as one of the best partners to offer The Trade-In Mortgage in Texas,” said Dan Mugge, chief operating officer at Calque. “Home equity is at an all-time high. Despite record-high interest rates, homeowners can take advantage of the equity they have built in their current home to position themselves for the best mortgage possible for their next property. The Trade-In Mortgage makes a difference for buyers in Texas where equity is high, and inventory is low.”
Foster said this product is available in all states.
“I’m not aware of another program that provides LOs with a value-prop for consumers that doesn’t end up having to go back to bidding on rates,” Foster said.
