NKS Monthly

July 2007

Recently, a client of mine called to “pick my brain.” My clients wanted to move into a better home in a better neighborhood. They had been in their current home for 14 years and wanted a change, but were concerned about the softer real estate market that we are currently experiencing and what difficulties it would create for them.

They had been out looking at homes for sale in the areas they wanted to live. The prices were right, but they thought selling their home was going to be a problem.

Listening to the news media, the impression is that no one is buying homes. It’s true that things are slower than in 2006, but plenty of homes are still being bought and sold.

Once they realized that the real estate market is still active and that someone would buy their home, the next dilemma was how to come up with a down payment. They had plenty of equity in their current home and some savings but they did not want to tap out all of their savings in order to come up with a down payment.

Typically, the simplest way is to sell the current home and then buy a new one. Sometimes that’s not possible, so to get the down payment, we accessed the equity in their home with a no cost refinance, and a new line of credit for repairs on the new home and to cover payments on the old home. Once their old home is sold, they can pay off the line of credit and have just the right loan without having to refinance again.

Selling in a soft market makes sense if you are also

buying in a soft market. It’s the right time to move up. – Neal Smith