| |
| |
|
Real Estate Information |
|
|
Crossing the Gap from this Home to the Next: Bridge Loan
So you're thinking of getting into a bigger house. You call up the real estate agent and make an appointment to go see what the market has to offer. Then you find it, the perfect "move-up" home. It's everything you've ever wanted in a home unless your married, in which case it's everything your wife has ever wanted in a home. You'd make an offer right then and there but realize you need to sell your old home before you can by this one. You haven't even put your old house on the market yet. What to do? The real estate agent advises that you could make what's called a "contingent offer"; buying the new house is 'contingent' on you selling the old one. "Oops", says the agent, "Your old home isn't even listed yet? You may have wanted to do that before we went house hunting. Your offer is a little too 'contingent' for most sellers?they probably won't take it." But before you give up all hope of getting into the home you want, first consider a bridge loan. A bridge loan is a form of second trust that is collateralized by your present home in a manner that allows the proceeds to be used for closing on a new house before the old house is sold. A bridge loan "bridges" the gap between the two transactions and is often the difference between getting the house of your dreams and missing out entirely. Bridge loans can also be setup to completely pay off the old mortgage or to add the new mortgage to your current debt. Usually people who take out a bridge loan will use the funds to pay off the old mortgage while putting the rest towards the new home's down payment, first deducting any closing costs and prepaid interest. Typically, the loan is structured with a relatively short term, usually six months to a year, and hefty prepaid interest. Because of the risk involved in making a loan on collateral with only possible future value (the future sale of the old house), most lenders charge high interest rates on their bridge loans. The borrower typically must begin making these payments after six months if the house still hasn't sold. Most often, a bridge loan is used to pay off the existing mortgage, with the remainder (minus closing costs and prepaid interest) going toward the down payment on the new home. If after six months the old home has not sold, the borrower begins making interest-only payments on the loan. When the home eventually sells, the bridge loan is paid off; if the house sells with in six months, all unearned interests are credited to the borrower. In a perfect world you would have your house on the market will potential buyers making offers before you make any offers yourself. However, because of fluctuating market conditions, getting the timing right can be difficult. If you're willing to pay the higher rates and fees that come with a bridge loan you can buy yourself some extra time. While a bridge loan can get you the house you want when you want it, it can be a pricey option in the long run. If it's an option for you, it may be a better idea to borrow against assets such as stocks or your 401(k). This can save you a considerable amount of money. Before you do anything talk to someone who has experience in the financing side of the real estate market. There are more options for borrowers every year and consequently the process gradually gets more complicated. It pays to take the time to understand what you're getting into. About the Author
MORE RESOURCES: This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
Google News |
|
|
|
RELATED ARTICLES
Dont Get Stuck Having To Deal With The Sellers Household Hazardous Wastes - After You Move In! I have a confession to make!I was just outside with Frankie (my dog) and noticed I stillhad an old car battery sitting by the foundation, at therear of my house.Yes, I'll admit it's not right, and quite environmentallyinsensitive for me to have it there. Timing Clauses Stop Sellers From Inciting Bidding War It is no secret that the current real estate market is hot, hot, hot. Sellers can receive multiple bids for their property on the same day. Why Do Realtors Advertise Your Home in Print,on the Radio, on Television, etc.? Why Do Realtors Advertise Your Home in Print,on the Radio, on Television, etc.?Realtors represent a huge part of the national advertising expenditure each year in newspapers, magazines, radio and television. Selling Your Home In The Winter In many parts of the country, selling a home during the winter months can be a challenge. Dreary, cold weather and the end-of-the-year holidays can keep buyers away and heighten fears of your home staying on the market longer than expected. Are You Really A Twenty First Century Investor Today's residential real estate market for investors has become very competitive in most major markets. The vast majority of real estate investing seminars and clubs are encouraging you to search out desperate home owners or distressed properties to be rehabbed. Internet Battleground for Future of Residential Real Estate Real estate agents are gearing up to face the biggest shift in their industry since it's beginning. No longer the first in the path of homebuyers and sellers, agents have gone from top feeders to the bottom feeders with real estate consumers in just a few years. Interior Design Secrets for Selling Houses New concepts in Interior Design Psychology are helping home sellers net more money in today's competitive real estate market. Therefore, it's worthwhile to spend time planning the changes that will help your home sell for the highest price. Apartment Financing Explained So you're interested in entering the world of property management? Have you thought about how you're going to get into this potentially lucrative market? Let's face it; unless you've just inherited a large sum of money or are otherwise independently wealthy you're going to have to borrow. This is where apartment financing comes in. Kings Bay Georgia Real Estate - Be Picky When You Choose your Realtor! I have been a mortgage lender for many years and have seen a few transactions go sour. When problems arise after a contract is signed, it can be stressful for everyone involved. Expense List for Buying a Home There are many expenses that come with buying a home. The following list is a good example of what to expect:Down payment - A minimum of 20% of the home's purchase price is usually required for the best loan terms and to avoid paying private mortgage insurance (see below), but it's entirely possible to buy a house with a smaller down payment. How to Make Money in Real Estate Without Doing the Scrunch Work If you don't have the time to invest working on fixers or if your tired of working on fixers to make money investing in real estate, try this method.Many real estate investors make thousands of dollars on brand new homes with little work. Real Estate Wealth Protection Through Short Sales Is a sharp correction in store for the real estate market?Fannie Mae, the largest buyer of mortgages in the US, is worried. They recently warned that the probability of a housing bust has risen sharply in certain parts of the country. Real Estate Lease Option Danger Why are real estate investors having so much successoffering "rent to own" homes?Lease-options offer home ownership opportunitiesto folks with little cash and not so hot credit.Oh boy, there are plenty of those around. A Singles Game of Real Estate This discussion leans toward answering questions asked most often by our youthful men and women in there early twenties. They often begin to ask themselves the question, "Should I consider buying a home, condo/town-home or some other type of real estate that I can call my own?" Due to the fact that housing has up to this point always been provided for or lived in on a rented basis we tend to find that our newest contributing members of society find themselves at a loss for the most beneficial and advantageous way to enter this next phase of self-sufficiency. Follow-Up - The Key To Successful Closings If everyone always did everything they said they'd do, we'd all be a lot richer. Unfortunately, tasks are overlooked, and the ball is often dropped. The Bubble Effect Turn on the TV at almost any time day or night and you will find news and talk shows informing us that there is a Real Estate bubble. What is a "bubble" and how do they know? The simple principle of what goes up must come down is being applied in general thought now and many in the public are starting to buy it. When is the Best Time to Move? As Realtors, we are often asked, "When is the best season to move?" This is a tough question, one we cannot answer for you. Most people are asking about price, do they fluctuate throughout the year? NO. Home Buying Checklist - Windows If you are in the market to purchase a home, it can be easy to fall in love at first sight. Do so at your own risk. Why Property Investors can Crash and Burn Many experts say you can't lose if you put your money into Property. Not true. Reinventing Real Estate, Part 2: Online and Empowered Consumers Are Taking Charge and Paying Less Demanding consumers"Internet buyers tend to be better informed on market conditions and better prepared to act on the home they want when they start working with a realtor. Luckily for realtors, these changes don't necessarily hurt, as long as they are able to adjust to the new relationship and realize that the new-style buyers value speed and efficiency over guidance when finding a home.
|
| home | site map |
| © 2006 TIGER MEDIA |