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You Need A Home Equity Loan – Even Though You Don’t . . . 

You Need A Home Equity Loan – Even Though You Don’t . . . 

February 17, 2021 11:06 am

Sound confusing, then we have your attention, and this discussion is worth the time. In our industry we work with all types of buyers and even though you are not a buyer today, believe it or not, you might be tomorrow depending on life’s circumstances. 

We see this often, an out of the blue call from a past client who has just seen their ideal home and is beyond confident that they have the financial capacity to buy another property prior to selling their existing property. While they do have the capacity, it is not necessarily without assembling some complex temporary financing or selling a part of their portfolio. Consulting with their financial advisor, lender, Realtor, and CPA all take time. By then, the property has several other suitors who are all cash or have fully approved loans in place.  

You have worked hard, saved, and invested smartly. You have the purchasing capacity, but do you have immediate access to cash? Very often, our clients are overly confident they can buy what they want when they want, until such time they realize that accessing their wealth is a process and can have repercussions that then make them step back and hesitate. 

In the past, the strategy for such an event was to take out a “Bridge Loan”.  A Bridge Loan is funding that allows you access to immediate cash until such time that you can liquidate your stocks or sell your primary home. It is a second loan on top of your primary mortgage and is typically difficult to qualify for and comes with higher loan fees. The reason the fees, and sometimes rates, are higher is because the loan is higher risk since it is on top of your primary first home mortgage. Additionally, it is a short-term loan, so the lender will only be collecting interest for a brief period.  

Consider the Home Equity Loan, or as it’s known in the lending industry, the HELOC (Home Equity Line of Credit). For most of us, this is a loan we use after buying a home to help us combine credit card debt, pay off a car loan, or make some home improvements. It has been a program for Americans to consolidate debt and clean house, financially speaking, while hopefully being able to write off the interest expense. When lenders sell the product to you, they also suggest that it is a line of credit that you can keep open even if you aren’t using it. It is there for you in case of a family emergency or a financial crisis.  

Today, if you have an existing HELOC, it is also ideal for a spontaneous bridge loan and everything about it is better than getting a Bridge Loan. First, you don’t have to use it, it is just sitting there waiting for you to access the money. Second, the interest rate is low. The only question is – have you updated your line, and does it truly reflect all the equity you would like access to?  

The reason we recommend you put a HELOC on your home is that for immediate access to cash, you  simply write the check from the HELOC account without a phone call or diving into your IRA or 401K. 

You may not be in the market to buy a home today, or necessarily even planning to be, but we meet with spontaneous clients every day who tell us, “This morning I was running to Home Depot and I saw this open house and here I am writing up an offer! This is crazy”. In 2015, that wasn’t a problem, but in 2021, we see multiple offers and often up to 25% of the 8 to 16 offers are cash. Homes sell quickly.

If you have a HELOC in place, you can transfer the cash to your checking account the day you write the offer and show proof of funds. While you may never need it, the fact is that most of our clients cannot believe they don’t have instant access to their money, nor do they believe that there will be multiple cash offers, but this is what we are seeing. Those clients then look to get a HELOC in place on their home only to learn that it will take 30 to 60 days to get the financing and that they must sign documents stipulating that they cannot list their home for sale. Lenders see a HELOC as a long-term security on your home and base their lending decisions on intent for a homeowner to occupy the property. 

It is not a Bridge Loan. So, the next step is to get the Bridge loan, but that takes time and costs more money. In most cases, buyers today don’t have that time because before they know it, the home is gone. That is why having a HELOC in place now can be the difference maker in submitting a winning offer in the future. 

Due to the uniqueness of lending requirements for each situation, it is best to have a discussion with your lender and trusted financial advisor before you make any decisions. If you would like to learn from an expert, your ELEETE agent can connect you to a variety of preferred lenders who can guide and educate you about the process. Additionally, you can call your financial advisor, banker, mortgage lender, or ELEETE’s trusted colleague Brian Page at Guild Mortgage (503-452-0001). Brian has been ELEETE’s #1 resource since we opened our doors, and he is an educator. He is all about guiding and consulting and is a fabulous resource if you want to get a program in place for the future.  

 

 

 

    

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I have worked with Lee Davies on a few real estate sell/purchases over the years. He/His team is always focused on the clients needs. They have a true understanding of the market as a whole and understand every client, even a returning client needs individual and unique industry advise. A sell/purchase during this pandemic gives a new meaning to customer service and Lee and his team did not disappoint once again. Jennifer Holland was my go to realtor and I can count hundreds of text messages and emails between us through out the process. She never sleeps, is so professional and knows what you need before you do. Thank you to team Lee Davies and Jennifer Holland

Barbara F. - Portland, Oregon

“

It had been over 25 years since we had bought or sold a home and Lee Davies/Jen Holland helped us do both , in a very competitive market. We found a home that we liked in a neighborhood we have always been interested in and contacted lee for help in the buying process. He and his associate Jen Holland helped us to write a winning offer and then helped us navigate the inspection period. We also hired them to list our existing home which , at over 100 years old, was a special property that required a buyer who understood the special properties of a historic home. Jen’s attention to detail through the marketing process and Lee’s strategic advice on fielding the many offers we received in a short time were invaluable in securing a successful sale at an excellent price. This is an experienced team who has no doubt seen it all!

tuchmanns - Portland, Oregon

“

We came to work with Victoria Marchese via a recommendation and we couldn’t be happier. She was a consummate professional. Her communication skills meant we never felt out of the loop, and as first-time home buyers, the way she talked us through our questions was vital for us during the process. In the beginning, Victoria truly took the time to get a deeper understanding of what we were looking for in a home; we never felt like just another client. When negotiating repairs, even up against deadlines, she always had our best interest front and center. All of the challenges that you would think come with buying a home during a pandemic were virtually non-existent for us, and I put that down to Victoria’s excellent work ethic and guidance. I would definitely recommend her to friends and family.

Ben M. - Portland, Oregon

“

Tony Apa and Courtney Clarke were a fantastic team.  They literally came to our house for the first time in the middle of a remodel and within 2.5 weeks of meeting them, our house was pending.  From the staging to the brochures to the house video, they knew how to do it all. They are a fantastic team that complement each other well in terms of IT expertise, communication with clients and potential buyers, as well as friendliness and trustworthiness.  I 100% recommend them and you will be in great hands with them.

anu b. - Portland, Oregon

“

We have been so impressed by the responsiveness and resourcefulness of Tony Apa and Courtney Clarke. From the start of the process and understanding our needs all the way to post-close. What an amazing team! Thank you, thank you, thank YOU!

David N. - Portland, Oregon

“

Shelly Brown is a fantastic and professional to work with! Shelly really knows PDX real estate and is skilled at the art of negotiation. She really looked out for our best interests as buyers. Shelly is fantastic at keeping clients updated throughout the whole buying process. She is responsive to any questions or concerns. I would highly recommend buying a home with her.

Paige P. - Portland, Oregon

“

We cannot begin to express what an amazing experience we have had with Shelly Brown and Grace. We sold and bought with them and it has been nothing short of perfection. Shelly has an incredible knowledge of the market and the latest rules and regulations. When you work with Shelly you really feel like she is listening to your needs and desires and puts them into action during the selling/buying process. Grace does such a great job of keeping all of the wheels moving along and communicates clearly during the process. They have both been responsive above and beyond what we have ever experienced. Thank you for making our transitions both buying and selling a real effortless and smooth transformation for our family.

Leonard - Portland, Oregon

“

Sarah Pitzman is extremely knowledgeable, prompt and responsive. She provide excellent customer service and went above and beyond expectations. Sarah also had great negotiation skills and knowledgeable about the selling and purchasing process.

elizwhite - Portland, Oregon

“

We started working with Lauren Sinha in 2017 looking to buy are first home.  Our experience then was amazing and Lauren took so much of the stress of being a first time home buyer off of our shoulders.  As we started to look at our buy our next home we immediately thought of Lauren.  We spent several months looking at dozens of homes this year in a crazy market.  After multiple offers and being out bid, we finally found a home we absolutely love.  Lauren knows the market and how to close a deal.  When it comes time to selling our home Lauren will be our first call and she is the only agent we refer people too.

Max T. - Portland, Oregon

“

Kendall Bergstrom is fantastic. She was thoughtful, listened to our needs, and found us a number of amazing homes. Most importantly, she made what I would consider “scary” – moving to an entirely new state – comfortable and enjoyable. I can’t recommend Kendall enough.

Steve M. - Portland, Oregon

“

Kendall Bergstrom is the most intelligent, market savvy and thoughtful agent I have ever met. She consistently gave us great advice and information from price setting to staging to negotiations. She was always two steps ahead and worked diligently on our behalf. It was the most painless experience in real estate I have had. I would work with her again any day.

Steve D. - Lake Oswego, Oregon

“

The Kendall Bergstrom team is the rumoured golden unicorn in the sales and service industry! Many-many positive differences from other brokers. Kendall is a lightning fast communicator, honest, trustworthy, market-precise, and always up to speed on value and projected ROI. My spouse and I worked with Kendall for over a year (through Covid-19), though the market was sparse, we persisted and Kendall stayed the course. We were buying from the east coast and needed someone to exercise all five senses for us. That is a great deal of responsibility and Kendall bore this task with complete and utter GRACE. The FIRST home that we proceeded with showed major red flags and Kendall was quick to signal caution and counsel us- even though it is not what we wanted to hear and cost her a sale. However, patience obtains ALL, because just three months later our dream home came up for purchase. We were thankful that we had waited and stopped the first sale. After moving through the negotiation, inspection and closing process with Kendall nearly twice, I can easily say that every step was clearly thought out, monitored and expertly managed. I can not talk about Kendall without including her team. We were assigned to work with Kelly, who was a phenomenon on her own. She never tired of my questions, requests for video, facetime, measurements and endless contractor referrals. Having a direct line to Kelly was akin to having a personal concierge with dedicated knowledge of Portland’s west side. Kendall and Kelly were both present for the walk through prior to close. Kendall beautifully and tactfully caught errors and oversights missed by the selling party. She quickly had everything righted for us without us even asking. Also, we found a lovely assortment of thoughtful items placed throughout our home to help with the move in from PPE, toiletry basics, kitchen supplies and a lovely gift basket. I have been through the process seven times and I am sure that you can NOT do better.

Walker Blake J. - Portland, Oregon

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Portland, OR 97225

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Lake Oswego, OR 97034

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