We cannot afford 2 mortgages but love the bank owned home. They of course will not accept contigency offers. Is a bridge loan a good idea or are there other financing options out there? Or do we just be patient and wait until our home sells and possibly miss out on the deal? Thanks!
2007-03-08 06:11:19 · 5 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
A bridge loan is a loan from a third party who will lend you the down payment during the time that your current home is in the process of being sold. It generally comes with the understanding that it will be repaid in full in a very short time (say 60 or 90 days).
Congrats on the purchase of your home.
2007-03-08 06:18:57 · answer #1 · answered by kentata 6 · 0⤊ 0⤋
A bridge loan will typically only lend up to 80% of your current appraised value. They will pay off your existing liens, and set aside 6-12 months of interest payments and pay itself as you go. This removes you from having to make any payments, and lets you qualify on the new home alone. Any unused interest is credited back when you sell. They discount it to 80% to make sure you can cover all selling costs, which can get up to 10% of sales price with realtor commissions and deed taxes, and to leave some room for you to be able to drop price if necessary.
So, you can really only owe maybe 70% of your expected sales price to take advantage of a true bridge loan. Few people have that kind of equity nowadays, so they just aren't done that terribly often.
Your only other real option is to take as much equity out of your current home as possible now, and see if you can somehow get approved for both houses. You might need to do a no ratio or no doc type of loan, and take slightly higher rates. Then you slap your house on the market and hope it sells as fast as possible, so you don't have to double up on payments if you can avoid it. This of course has it's risks, but if you have the credit for it and a bit of cash in the bank, it might be the only way to get this house you really want.
So, how badly do you need THAT house? Can you find one as good later?
2007-03-08 14:57:25 · answer #2 · answered by Yanswersmonitorsarenazis 5 · 0⤊ 0⤋
Bridge loans are short term loans banks make to allow you to buy your new house while waiting for your old one ot sell. When you sell your old one, the bridge loan is paid off with the proceeds, your equity, and the lien is released. A lot of people go that route.
2007-03-08 14:20:00 · answer #3 · answered by Fordman 7 · 0⤊ 0⤋
A bridging loan or swing loan, is a short-term loan to people (investors, managers, or individuals) who need access to a large amount of money in a very short amount of time.
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2007-03-12 13:46:38 · answer #4 · answered by Anonymous · 0⤊ 0⤋
Hey can't help you out but check http://sa-property.blogspot.com they might have some property, mortgage related answers for you or at least have a useful link.
2007-03-08 14:20:59 · answer #5 · answered by wizardmansa 1 · 0⤊ 0⤋