How Does the Cash Offer Compare to Traditional Bridge Loans?

One of the most compelling aspects of the Cash Offer is its cost-effectiveness compared to traditional bridge loans. In our example scenario, the total cost for the Cash Offer is as low as $21,300, while a traditional bridge loan might cost around $50,000. This significant difference in cost can make a substantial impact on your overall financial planning and homebuying experience.

Additionally, with the Cash Offer, you retain 100% of the profits from the sale of your old home. You only need to pay off the bridge loan against the new property, ensuring that you only pay for what you use.

Case Study: Leveraging the Cash Offer for a Smooth Home Transition

Background

Sarah and John, a couple residing in Palo Alto, CA, were looking to downsize from their current home, valued at $2 million, to a more manageable property in the picturesque community of Rossmoor in Walnut Creek, valued at $700,000.

Challenge

Unfortunately, homes in Rossmoor were ineligible for traditional financing due to issues with the HOAs insurance, so Sarah and John were stuck. While they had ample savings, they did not want to liquidate their hard-earned retirement accounts and incur massive tax penalties to purchase their future home in cash. They were also not up for the headache of moving into a temporary home as they sold their current one to free up the money tied up in their home’s equity.

Solution: Cash Offer

After consulting with JVM Lending, Sarah and John were introduced to the Cash Offer program. This innovative financing solution was designed to enable buyers like them to make cash offers on new properties while still owning their current home. The program provided the flexibility they needed, with several key benefits:

1. Becoming Cash Buyers: With the Cash Offer, Sarah and John could make a cash offer on the new property, significantly increasing their chances of securing it in a competitive market and avoiding the cumbersome traditional loan approval process.
2. Quick Closing: The program allowed them to close on the new home within 10 business days, making everything painless.
3. Cost-Effective Solution: The total cost of the Cash Offer, including origination fees and interest accrual, was considerably lower than other traditional bridge loans they looked at, making it a financially viable option.

Implementation

Sarah and John decided to proceed with the Cash Offer. Here’s how the process unfolded:

1. Pre-Approval: They obtained pre-approval from JVM Lending to ensure they met the investor’s profile and could access their cash once the right home was identified.
2. Cash Offer: Using the Cash Offer, they made a cash offer on the $700,000 Rossmoor property, putting down only 5% ($35,000) and securing a loan amount of $665,000.
3. Fee Structure: The fees at closing included a 2% origination fee ($13,300) and a $2,500 EasyPath contract fee against their existing home, totaling $15,800. After closing, interest accrued at $5,536 per month until the sale of their current home.
4. Closing: Within 10 business days, Sarah and John successfully closed on their new home, moving into their desired community without any hitches.
5. Selling the Current Home: After moving into their new home, Sarah and John focused on selling their Palo Alto property. Once sold, they used the proceeds to pay off the bridge loan, with no monthly payments having been required during the transition.

Outcome

The Cash Offer proved to be a game-changer for Sarah and John. They were able to:

• Secure their dream home in Rossmoor without delay.
• Avoid the stress and high costs associated with traditional bridge loans.
• Only move once and avoid any hassle of a short-term relocation.
• Transition smoothly from their old home to their new one, maintaining financial stability throughout the process.

By utilizing the Cash Offer, Sarah and John not only saved money but also gained peace of mind, knowing they had a reliable and efficient solution in place.

Conclusion

The Cash Offer is an exemplary solution for homebuyers needing to navigate the complexities of buying a new home while still owning their current residence. It offers the benefits of a cash offer, quick closing times, and cost savings, making it a preferred choice for savvy buyers in competitive markets. Sarah and John’s case demonstrates how JVM Lending’s innovative financing options can turn potential challenges into seamless, successful transitions.

Frequently Asked Questions

How quickly can I close on a new home with the Cash Offer?

You can close on a new purchase within 10 business days, making this program ideal for competitive markets.

Are there any monthly payments with the Cash Offer?

No, interest accrues until payoff with no monthly payments due, easing cash flow concerns during the transition between homes.

Do I need to be pre-approved for long-term financing?

Consumers must be pre-approved for long-term takeout of the purchase bridge only if they do not have another “exit strategy” with which to pay off the bridge loan investor. Buyers who have sufficient equity in their current home to pay off the bridge loan in full do not need a long-term financing backup plan.

Your Next Steps

The Cash Offer is a powerful tool for homebuyers looking to gain a competitive edge in the real estate market. By allowing you to make cash offers and providing bridge financing, this program offers flexibility, speed, and cost savings. At JVM Lending, we’re committed to helping you navigate this process with ease and confidence.

Reach out to JVM Lending at (855) 855-4491 or [email protected] for a consultation and start your journey to a brighter, more secure home-owning future.