Homeowners who are both selling and buying can face challenges with reconciling both transactions, especially in competitive markets. Bridge loans may be a great solution to this dilemma. The information below on Palm Beach FL bridge loans – overview of bridge loans will help you better understand this financing program.
Palm Beach FL Bridge Loans – Overview Of Bridge Loans
Many homeowners have equity in their existing real estate. There may be a gap in the date that the equity is available for use if a new home must be settled before the old home closes. Bridge loans are temporary loans that bridge that gap. It is a substitute for home equity loans (since most lenders do not approve home equity loans for properties on the market).
The underwriting process and criteria for bridge loans will be very different from conventional home loans. Because bridge loans are short-term, they are not usually sold to the secondary market and thus need not use the same standards. Minimum credit scores, ratios, and other qualifying factors can vary from one lender to another. 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 new property). Thus, the borrower must qualify to pay both.
Weighing the Pros and Cons of Bridge Loans
Bridge loans allow real estate consumers to purchase and sell without the use contingencies on both transactions and squeezing in simultaneous closings. This can sometimes result in additional negotiation ability or put together transactions that can otherwise not work out. It can also make the packing and moving process easier by removing the need for short-term storage in same-day closing situations. On the other hand, not all homeowners qualify for bridge financing. They are also more costly than home equity financing. Consumers should weigh these factors with the assistance of both real estate representatives and mortgage consultants.
Where to Begin
Whether you should obtain a bridge loan should be based on your financial and buying and selling goals. A local mortgage company that offers bridge loans can provide more detailed information beyond the Palm Beach FL bridge loans – overview of bridge loans in this blog.