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Save Time With a Bridge Loan
Why You Need a Bridge Loan
You have to move fast in today's housing market if you want to get into the home of your dreams. In cities such as Seattle or San Francisco it's not uncommon for a buyer to receive half a dozen offers within the first day or two after putting the house on the market.
Unless you have enough excess income to buy a second home without selling your current abode, you will have to play the timing game; finding a home to purchase while finding a buyer for your own. This can be especially sticky if you are buying in an area with a hotter market than the one you're leaving. Most sellers won't be willing to accept 'contingent' offers (you buying their home is 'contingent' on you selling your home) because of the overwhelming demand in the area manifest by the numerous potential buyers beating down their door.
Under these competitive conditions, a bridge loan may be just what you need to avoid missing out on a time sensitive real estate purchase. Not sure how to go about securing a bridge loan? Eventually you'll go through a bank or private lender to get a bridge loan, but it pays to know the basics before you set foot into the local loan office.
Bridge Loan Basics
Strictly defined, a bridge loan is a form of second trust that is collateralized by your present home in a manner that allows the proceeds to be used for closing on a new house before the old house is sold.
The fact that you are not immediately required to sell your old home makes a bridge loan the logical solution for people in relatively cold markets who need to act quickly in order to close on a new home.
Most people who get a bridge loan will use the extra cash to pay off the mortgage on the old home, deduct any closing costs and prepaid interest, and put the remainder towards a down payment on the new home.
A bridge loan entails substantial risk for the lender because the old home may not sell for some time. Therefore, you can expect relatively high interest rates and short terms of six months to a year. The borrower usually begins making interest payments after the end of the term if the old house still hasn't sold.
After the old home sells, the bridge loan is paid off. If the house sells within the term limit, all unearned interest is credited back to the borrower.
Get Professional Bridge Loan Advice
Before you sign on any dotted lines, make sure the lender you're working with has taken all the time you need to explain bridge loan details to your satisfaction. Depending on your individual situation, securing a bridge loan can be somewhat complicated. Having a relationship of trust with your lender can help simplify the process.
MORE RESOURCES updated Thu. September / 24 / 2020
Refinancing Your Mortgage Is About to Get More Expensive The Wall Street Journal
Mortgage and refinance rates today, September 24, 2020 | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
Mortgage and refinance rates today, September 24, 2020 | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
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A record number of borrowers can now save on a mortgage refinance, as rates set another historic low - CNBC
A record number of borrowers can now save on a mortgage refinance, as rates set another historic low CNBC
Mortgage lenders are adding the refinancing fee. You can still avoid it if you act now. - Bankrate.com
Mortgage lenders are adding the refinancing fee. You can still avoid it if you act now. Bankrate.com
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Mortgage and refinance rates today, September 15, 2020 | Mortgage Rates, Mortgage News and Strategy - The Mortgage Reports
Mortgage and refinance rates today, September 15, 2020 | Mortgage Rates, Mortgage News and Strategy The Mortgage Reports
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15-year mortgage rate hits new record low Bankrate.com
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Coronavirus is driving a home renovation boom: Most popular projects, plus financing tips Bankrate.com
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Millennials drive huge VA home loan refinance boost in Hampton Roads - The Virginian-Pilot - Virginian-Pilot
Millennials drive huge VA home loan refinance boost in Hampton Roads - The Virginian-Pilot Virginian-Pilot
Record number of banks offering cashback of up to $4000 for moving your mortgage, but is it worth it? - 9News
Record number of banks offering cashback of up to $4000 for moving your mortgage, but is it worth it? 9News
Seven Out of 10 Homeowners Who Research Refinancing Get Unwanted Sales Pitches: Survey - Credible News
Seven Out of 10 Homeowners Who Research Refinancing Get Unwanted Sales Pitches: Survey Credible News
Pontiac's United Wholesale Mortgage to go public with Gores Group The Detroit News
What You Should Know About Non-Bank Mortgage Lenders The Motley Fool
Homeowners Are Gaining Equity. Here's Why That's a Good Thing The Motley Fool
Mortgage refinance: Everything you need to know Fox Business
The Median U.S. Home Value Has Reached a Record High -- and That's Bad News for Buyers - The Motley Fool
The Median U.S. Home Value Has Reached a Record High -- and That's Bad News for Buyers The Motley Fool
How to get the best mortgage refinance rates Fox Business
10 things to know before refinancing your mortgage Fox Business
Mortgage Associate Charlotte Agenda
When should you refinance your mortgage? Fox Business
Compare Today's Mortgage Refinance Rates: Sep 23 Credible News
How to get a low-cost mortgage refinance Bankrate.com
Mortgage refinancing is about to get more expensive Pittsburgh Post-Gazette
How does mortgage refinancing work? Bankrate.com
Refinancing Your Mortgage? Those Rock-Bottom Interest Rates Aren’t for You - The Wall Street Journal
Refinancing Your Mortgage? Those Rock-Bottom Interest Rates Aren’t for You The Wall Street Journal
Should you refinance your mortgage? Tennessean
Mortgage refinance applications spike 79% as homeowners rush to take advantage of lower rates - CNBC