How to sidestep the Hubbard clause…
Mortgage Equity Partners offers bridge loans, including our proprietary Hubbard Buster bridge loan.
The Hubbard Buster bridge financing program
- Access Equity towards a down payment
- Eliminate your current housing expense
- Qualify for more and remove the contingencies preventing you from winning your offers
The Hubbard Buster, a unique bridge loan offered by Mortgage Equity Partners, is a game-changer in a competitive housing market. It allows you to use the equity in your current home to buy a new one without making monthly payments on the bridge financing. This means you can make a non-contingent offer on the new property, giving you a significant competitive advantage. With loan amounts up to $2MM and no payments due for 12 months, you have plenty of time to sell your home, making the Hubbard Buster a powerful tool in your homebuying strategy.
What is a Hubbard clause?
In residential real estate transactions, you may encounter a term known as the “Hubbard clause.” This concept is important to grasp since it can significantly influence the outcome of a home sale.
The Hubbard clause takes its name from a 1987 New York court case (Hubbard v. 44 Warrendale Bayne Corp.) and is sometimes included in a real estate contract. Its primary purpose is to address a specific scenario: when a buyer wants to purchase a new home but is dependent on selling their current home first. The Hubbard clause allows buyers to make an offer on a new property while attempting to sell their existing one. It protects the buyer and allows them not to move forward on the home purchase if they don’t sell their home. However, in a market like the one we see today in many states nationwide, removing the home sale contingency can be the difference between winning the bidding war on a new home or losing it to an all-cash buyer or a buyer with no contingencies. Some sellers see the home sale contingency as a negative and may only accept offers with no home sale contingency.
How does a Hubbard clause/home sale contingency work?
- A potential homebuyer who needs to sell their current property first submits an offer on a new home. This offer is usually contingent upon selling their existing home within a specified timeframe.
- The Hubbard clause specifies a timeframe during which the buyer must secure a buyer for their current property. The length of time is negotiable and can range from weeks to months.
- Once the buyer receives an offer for their current home, they must notify the seller of the new property. The buyer can then remove the Hubbard clause contingency.
- If the seller has received a new offer while waiting for the initial buyer to sell their home, they can give the initial buyer a specified amount of time (usually 72 hours) to remove the contingency by securing a buyer for their current home.
- If the initial buyer secures a buyer for their current property within the specified time, the sale of the new home proceeds as planned. If the initial buyer fails to secure a buyer for their current property within the timeframe, the seller can move forward with the new offer.
What makes the Hubbard Buster unique?
- Bridge Financing Program pays off the existing lien while providing the cash out needed for down payment on the new home
- Equity used for down payment for the new home
- No monthly payments on the bridge financing
- Up to 75% LTV on bridge loan, depending on occupancy and loan amount.
- Balloon payment due in 12 months with NO MONTHLY PAYMENTS REQUIRED
- Loan amounts as high as $2,000,000
- Bridge financing only available in conjunction with financing on the new purchase home
- Reverse 1031 Exchange financing solution
Why do people use Hubbard clauses?
A Hubbard clause is more beneficial for the buyer. It gives them flexibility and security, knowing they will not have to move forward with the contract until they sell their home.
Some sellers are willing to agree to an offer with a Hubbard clause. However, if you are a buyer who has used the Hubbard clause or home sale contingency and your offers are not getting accepted, we can help you win the next one with our Hubbard Buster Bridge Loan. Contact our knowledgeable loan officers today to learn more and see if you qualify!
