Jump to content

Bridge loans are making a comeback among home buyers


cv91915
 Share

The last post in this topic was posted 1598 days ago. 

 

We strongly encourage you to start a new post instead of replying to this one.

Recommended Posts

Back in the mid-2000s and before, homebuyers often obtained bridge loans to give them money to buy a new home while they were waiting on their current home to sell.

 

....

 

"You're able to use the equity in your current home before you sell it," said Meredith Weil, chief operating officer at Third Federal.

 

For example, if you own a home worth $225,000 and have a mortgage balance of $125,000. If you get a bridge loan for $200,000, you could pay off the existing $125,000 mortgage and have $75,000 to use as a downpayment on your next home. Theoretically, you could buy a $375,000 home with a 20 percent downpayment -- the $75,000.

http://www.cleveland.com/business/index.ssf/2017/09/bridge_loans_are_making_a_come.html#incart_river_index

Link to comment
Share on other sites


Interesting. When we put our house up for sale in 2011, we purchased a new home with 10% down and 30-year financing. Upon sale of our former home, 8 mo later, we refi'd into a 15 year mortgage, applying proceeds to pay down the balance.

 

Potentially, a bridge loan might have saved time and money, depending on the terms.

Link to comment
Share on other sites

Interesting. When we put our house up for sale in 2011, we purchased a new home with 10% down and 30-year financing. Upon sale of our former home, 8 mo later, we refi'd into a 15 year mortgage, applying proceeds to pay down the balance.

 

Potentially, a bridge loan might have saved time and money, depending on the terms.

I haven't found much concrete info on pricing for loans like this, but it cannot be inexpensive. I've seen "as low as 7.5%" and I've also seen references to significant upfront/closing costs.

 

It does buy you a tremendous amount of flexibility, though. Since the type of bridge loan mentioned doesn't have monthly payments (you repay in full plus interest when your leveraged home sells) the bridge loan doesn't count against your DTI.

 

Obviously you'd want to do the math to see if the flexibility was worth the cost.

Link to comment
Share on other sites

The last post in this topic was posted 1598 days ago. 

 

We strongly encourage you to start a new post instead of replying to this one.

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share




  • Member Statistics

    • Total Members
      183,343
    • Most Online
      2,046

    Newest Member
    cain1974
    Joined
×
×
  • Create New...

Important Information

Guidelines