Homeowners who are both selling and buying can face challenges with coordinating both events, especially in competitive real estate markets. Bridge loans are an option for individuals facing this problem. The information below on Newton bridge loans – overview of bridge loans will help you better understand this financing option.
Newton Bridge Loans – Overview Of Bridge Loans
Many homeowners have equity in their existing property. There may be a gap in the date that the equity is available for use if a real estate purchase must be finalized prior to the existing real estate selling. Bridge loans are a solution to bridge the gap. It is an alternative to a home equity loan (since most lenders will not permit home equity loans for homes on the market).
The review process and criteria for bridge loans can differ from typical mortgages. Since bridge loans have short lengths of time, they are not usually submitted to the secondary mortgage market and as a result need not comply with the same standards. FICO scores, debt-to-income ratios, and other qualifying criteria may range from one lender to another. During the length of the bridge loan, the homeowner will actually carry two home loans (one on the hoem listed for sale and one on the property purchased). Therefore, the borrower must be able to pay both.
Weighing the Advantages & Disadvantages of Bridge Loans
Bridge loans allow homeowners to purchase and sell without the added stress ofhome sale and home purchase contingenies and scheduling same day closings. This can often result in additional negotiation leverage or put together contracts that can otherwise fall apart. It can also make the packing and moving process easier by removing the need for temporary storage in same-day closing scenarios. On the other hand, not all borrowers qualify for bridge financing. They also have more fees than home equity financing. Buyers and sellers should weigh these factors with the help of both real estate agents and mortgage consultants.
The First Step
Whether you should obtain a bridge loan is dependent on your finances and real estate goals. A local mortgage company that offers bridge loans can offer more in-depth details beyond the Newton bridge loans – overview of bridge loans in this blog.