Specializing in Grosse Pointe, St. Clair Shores
Harrison and Chesterfield Twp, Harper Woods
Bridge Loans can be a good thing. A Bridge Loan is a short-term
loan that lets you essentially borrow from yourself, taping into
the equity of your current home to make your down payment.
They allow you to shop until you find your next home. You can
make an offer and even close the transaction before you put your
current home on the market.
Often, people want to buy a home before their home is sold. There are various reasons for this. One reason may be that you have noticed the dream home you have been pining over for years has just gone on the market. You have lived in your home for several years and have quite a bit of equity built up in your current home. Your home is not quite ready to be put on the market yet due to some repair work or updating you have been putting off for some time. Or, maybe you just do not want to be pushed into buying the first home that comes along because your home has already sold. In either scenario, you are a prime candidate to look into a Bridge Loan instead of making the sale of your next home contingent on the sale of your current home. For some sellers, this could be the deciding factor to accept your offer over another offer that is contingent upon the sale of a home. The choice is yours as long as you can afford to make the temporary payments.
Bridge loans can vary widely so be sure to shop for your best interest rate and payment plan. Essentially, your equity now becomes your down payment and it is no longer a 100% loan. Plans can vary:
Two payments of both old and new home, usually you have no deadline on paying it off.
One lump sum temporary monthly house payment with a payment time delay of 60 to 90 days and may only by charged interest. Payable after you sell your home. At that time, your bridge loan would be re-amortized at the same rate on the second home only.
Bridge Loan against investments can also be considered.
For more information on Bridge Loans, contact your bank or credit union. If you need a referral, please go to my "Links" button and choose a Mortgage Lender. With some you can apply right on line.