Are you in the market for a new home and looking for ways to finance it? Have you heard of bridge loan lenders but you’re worried they might not be the right choice for you?
On average, more than 5.6 million homes are sold in the US each year. There’s a lot of competition in the market, so it’s good to have your financing in place before you put in an offer.
If you’re looking at a mortgage bridge loan to finance your new home, you need more information. Here’s a guide to what they are and how they work.
What Is A Mortgage Bridge Loan?
A bridge loan is a short-term loan designed to assist a homeowner when they need to buy a new home. They’re a flexible option that allows you to move quickly.
Bridge loan rates are usually higher than a regular mortgage. Bridge loan lenders may require you to agree to use them for the regular mortgage loan when you buy your new home.
Benefits Of A Mortgage Bridge Loan
When you are a homeowner, sometimes you have to sell your old home before you can buy the new one. Sometimes that doesn’t happen in the right order. You might find your new home before you finalize the sale of your old one. In that case, a mortgage bridge loan is a perfect fit.
You can make your offer on the new home without making the offer contingent on selling your old home. That makes your offer more attractive to the seller. In an active market, that can make the difference.
Bridge loan lenders may offer payment flexibility, allowing you to defer payments until your home sells. Lenders like Kiavi bridge loans, offer low-cost, short-term loans for real estate investors who fix and flip properties.
If you have to relocate for work, a home bridge loan can allow you to shop for a home in the new location right away. You can get the funds you need quickly because it may be faster to qualify for a real estate bridge loan.
Things To Consider Before You Sign
While a bridge loan may make it convenient for you to finance the purchase of your new home, it’s good to know the cons before you go ahead.
Most bridge loan lenders require a large down payment on the purchase of your second home, so you’ll have to have at least that much equity in your current home.
You’ll have two houses to maintain and two mortgages to make payments on. While the plan is to sell one house, it might take longer than you hope.
When you purchase a home, there are additional costs to add to your budget. Legal costs, the title search, and closing costs add to your financial pressures.
The bridge loan lender usually will charge an application fee, require an appraisal on the new home, and may charge you for a credit report.
Choose The Right Mortgage For Your Needs
When you understand what a mortgage bridge loan is and how it works, you’ll know if it’s the right choice for your financing needs.
If you enjoyed learning about mortgage bridge loans, you can find more related information on our blog. Check it out today!