Individuals who are both selling and buying can be challenged with reconciling both events, especially in competitive real estate markets. Bridge loans can be a effective solution to this dilemma. The following information on Grand Rapids Michigan bridge loans – how bridge loans work will help you with understanding this financing program.
Grand Rapids Michigan Bridge Loans – How Bridge Loans Work
Many home sellers have equity in their property. There can be a gap in the date that the equity is available if a property purchase must be completed before the existing real estate closing. Bridge loans are a solution to bridge that gap. It is an alternative to a home equity loan (since many mortgage companies will not allow home equity loans for homes on the market).
The underwriting process and qualifications for bridge loans may differ from traditional loans. Because bridge loans have shorter lengths of time, they are not usually submitted to the secondary market and thus need not use the same standards. Minimum credit scores, ratios, and other financial factors can differ among lenders. During the life of the bridge loan, the borrower will basically have two mortgages (one on the hoem listed for sale and one on the property purchased). Therefore, qualifying to carry both mortgages is a factor.
Evaluating Bridge Loans
Bridge loans allow real estate consumers to buy and list without the added stress of contingencies on both transactions and requiring simultaneous closings. This can often provide additional negotiation leverage or bring together deals that can otherwise not work out. It can also make the packing and moving coordination less stressful by removing the need for interim storage in same-day closing situations. On the other hand, not everyone qualify for bridge financing. They are also more expensive than home equity loans. Homeowners should evaluate these pros and cons with the assistance of both real estate agents and mortgage consultants.
Whether you should request a bridge loan should be based on your finances and home buying and selling situation. A local lender that provides bridge loans can offer more in-depth information beyond the Grand Rapids Michigan bridge loans – how bridge loans work in this blog. If you have any questions feel free to give John a call at 616.949.1004