How a Bridge Loan Helps You Buy While the Old House Is Still On The Market | Wilmington NC real estateBe the first to comment on this post
Nobody wants to carry two mortgages on two homes at the same time. Sometimes, however, an overlap between buying a new home and selling the old one occurs. A bridge loan (also, “gap” or “swing” loan) can defeat the blockade, take the pressure off the monthly budget and provide down payment money that will make everything move along more smoothly.
- Know what to expect.
- A bridge loan is a short-term loan for which the equity in your old home (and sometimes in your new one) serves as collateral. Various lenders charge different interest rates – often 1 or 2 percentage points above the current prime rate, or a bit higher than the current regular mortgage rate. Depending on lender’s requirements (appraisal, title search, etc.), closing costs can be anywhere from 0.5% to 1.5% of the loan amount.
- Pay off when you sell.
- You may pay the loan off when you sell your home, or in monthly or quarterly installments. If your home does not sell within the specified term (often 6 months or a year), the loan is usually renewable.
Bridge loans are only one of the many tricks in our bag to help you smooth your move. If you’re planning to move soon, contact us by e-mail or phone. We’ll be happy to help. For more information and advice, please visit www.cbbaker.com. Whether you are selling or buying, the information is there for you to use.