|
|
Bridge loans can give you a
competitive advantage
In a seller’s market, the competition for houses can be
fierce. Many sellers will turn down any offer they receive
that has a contingency clause (for example, a clause that
states the offer is contingent on the buyer selling their
own house). This can be problematic for the buyer who does
indeed have a house to sell.
To stay competitive in a tight market, some buyers make the
choice of securing a bridge loan (also known as a swing loan
or bridge financing). A bridge loan covers the gap between
the time a buyer closes on their new home and the time in
which their old house sells.
Typically a bridge loan is structured as a one year loan.
The bridge loan pays off the buyer’s first house with the
remaining funds, minus closing costs and six month’s of
interest, going toward the down payment for the new house.
If after six months the first house has not sold, the buyer
will begin making interest-only payments on the bridge
loan. When the first house sells, the bridge loan is
paid-off. If the old house sells within the first six
months, any unearned interest payments will be credited to
the buyer.
This is the typical bridge loan scenario for most buyers.
In some cases a buyer may qualify for a bridge loan that
simply adds the cost of their new house to their current
debt.
A bridge loan can help you make a competitive offer on a
property even though your first house has yet to sell. If
you’d like this extra bit of negotiating leverage, lets get
together to talk about your options. Let me know a good
time to contact you. I look forward to helping you!
|
|
