Taking Stock for Swift Action.
Not A News Alert:
It’s a seller’s market. With low inventory and a high churn rate in the Florida real estate market, multiple offers are grossly exceeding the asking price. How do you triumph in such a market? What you can count on is that you will need to act fast and have cash ready to win. You do not want to sell first, then try to find a home in this market. According to NAR more than 60% of buyers secure a down payment from savings. But that’s not always the smartest money move.
Kung Fu Fighting
Financial black belts aren’t very different from Kung Fu warriors. Each stands coiled in the stillness of preparedness before striking to win. True Taoists, savvy warriors seek the minimum effort for maximum effect.
Taking Stock
Start with this simple exercise: In one column, write down the value of every asset you hold. Include property values, 401K, Roth IRAs, whole life policy value, savings, big-ticket items. Note your income stream. Stop for a cocktail.
Now take a deep breath, and write down every single cent you owe, plus your monthly expenses.
With a spirit of detachment, look at those columns. How’s your cash flow? Your net worth? Your liquidity? How hard is your money working? It’s time to ponder options and partner up with a Sherpa.
Strategies for Liquidity:
- If the lion’s share of value is tied up in your home, can you qualify for another mortgage? Should you investigate a HELOC to bridge a purchase short-term?
- If your 401k is healthy, would it make sense to lend yourself a down payment? Might you qualify to cash out some of your Roth IRA?
- Are you in a position to leverage a federally-backed mortgage with a low down payment, or a plan to “Recast” to eliminate the PMI once you sell your current home?
- If you have savings for a down payment, will that money work hardest as a down payment, or can it work harder elsewhere? Does the cost of PMI offset such a strategy?
These are questions a great lender will ask you during a rock-solid pre-approval process that is the necessary next step to think outside the bank.
