What You Need to Know About Bridge Loans
The hardest task that a homeowner can ever engage in is trying to sell and purchase a house at the same time. It does not matter the transaction that comes first there will be some financial hitches that will occur here and there. In most cases, you will have to either get some temporary accommodation especially if you sell before you purchase or some funding. If you purchase before you sell you can have the advantage of looking for some temporary form of financing to prevent the headache that would come with looking for money to pay for the house. If you take too long to get funds to pay for the new home you may end up losing the home to a person who has ready funds for the house. This is where a bridge loan comes in.
Bridge loans that those temporary loans that are secured by an existing home. These loans bridge the gap that exists between the real sales price of your new home and your new mortgage in times when your existing home has not sold before closing. These loans are very good for homebuyers since they allow you to purchase a new home and at the same time put your old home on the market without any restrictions. Besides, it is possible to gain some months that are free of payments and you can still purchase a new home even after you have removed the contingency to sell under particular circumstances.
When you take a bridge loan, you will enjoy flexible paying alternatives for your new home. Often times home buyers fall in love with a home before they are able to sell their existing homes. This means that if they do not have the funds to pay for the house they will need to forego the home and wait until their existing homes can sell. However, with a bridge loan, you can get short-term financing that will make it possible for you to pay for the new home as you wait for the old one to sell. This flexibility is only possible with bridge loans as long-term mortgages call for long-term commitment and they do not offer such flexibility.
It is also a good idea to take a bridge loan when you are not willing to commit any of your assets to secure the loan. The existing home is the asset that you use to secure your bridge loan and even the home does not sell they lender can always foreclose on this home. However, it will not be possible for the seller to come for any of your other assets since none of them were used as the security for the loan.
It is also important to note that bridge loans do not have any qualifying standards that exist in other long-term mortgage loans. The decision of whether or not to approve a loan is based on the case that is in question. This means that the loan is easier to get than other loans.