My borrower will be listing his current home Jan 1. He wants to downsize and found the perfect home, but will need to make the offer ASAP. He will be using his investment securities for the down payment. Will there be any problems with him still owning current home and borrowing from his securities?
He can purchase a new home as long as he can provide a copy of the purchase contract or MLS listing on his current home before closing. If the current home has an FHA loan on it, he will need to sell it before or concurrently with the new loan. If the homes are near each other he will need to write a detailed letter explaining why he is downsizing, along with signing an owner occupancy disclosure. Borrowed funds are not allowed on HECM loans, so as long as he is liquidating his assets he should be fine.