If you are planning a move to a new Schell Brothers home, you might hear the term “Transition Home Buyer”. This term covers a lot of ground, so what does it mean?
The very nature of a move is a transition: cleaning house, packing up, and getting from point A to point B. But you may find that there are certain major life events that also need to occur in order to make your dream a reality. Maybe you have to sell your current home or more than one home, or are retiring from your career and reducing your income. Maybe these changes are already in process, or maybe they will not be happening for another couple of years.
These types of changes make you a transition home buyer. It may seem daunting, but I will tell you how to “eat the elephant”, just one bite at a time! My role as a loan officer is to help you navigate through these changes and help you plan for the effect they will have on how you will finance or pay for your new home.
When we look at your personal situation, there are two important questions to consider: 1.) what is your situation today, and 2.) what will your situation be at the time your new home is completed and ready for settlement. If you are planning on obtaining a mortgage, any difference in income or liquid cash must be considered. The best way to plan is to think of the cash you have right now and the income you will have later.
Let’s assume you are planning on selling your current home to pay cash for the new one, let’s call this “Plan A”. We cannot consider those funds as available until the house is really sold. So, we look at a “Plan B” as your backup plan. Plan B might be a mortgage that could be taken if needed, and would be paid off once your current home actually sells. Having both a plan A and a plan B will give you peace of mind.
We look at income in a similar way. Let’s say you are still working and make $5,000 per month in income, but by the time your new home is complete, it is your plan to retire and start collecting a pension, which would reduce your income to $3,500 a month. To be safe, we would use the lower income in the preliminary loan approval process. Or, you could decide to keep working and retire a little later, if that works more in your favor.
Looking at your areas of transition now empowers you to know what you can afford and also to help plan your move timetable. See, one bite at a time!