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Old 11-03-2006, 09:26 AM
 
Location: Lots of sun and palm trees with occasional hurricane :)
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Anyone knowledgeable about this type of loan? If I want to relocate - duh and I find my new home but haven't sold my old home but I would like to be mortgage free in my new home when my old one does sell, what advice do the experts have regarding Bridge loans? The good, the bad, and the ugly, please. I wouldn't mind having a little bitty "debt" but would like to put most of my eggs into the new location. Thanks!!!
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Old 11-03-2006, 10:00 AM
 
Location: Union County, NC
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We had a presentation by our in-house mortgage broker a couple of weeks ago -- she said that there are other options to bridge loans that may work better for some people -- just PM me and I can give you her contact information. Best of luck
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Old 11-03-2006, 11:32 AM
 
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Bridge loans are not always the way to go due to the higher interest rate, many people I know take a home equity out of their existing home to down payment on the new one and when the old ones sells, all gets paid off but to your question:

A bridge loan is short term financing when you need cash fast. The repayment is also generally less, can be anywhere from 6 mos to 3 yrs, generally.

They need to be backed by collateral, ie- the home.

Simply it briges the gap when you need money for something but do not have it as you are waiting to sell something else.
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Old 11-03-2006, 12:02 PM
 
Location: Lots of sun and palm trees with occasional hurricane :)
8,292 posts, read 14,812,677 times
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Quote:
Originally Posted by Weis02 View Post
Bridge loans are not always the way to go due to the higher interest rate, many people I know take a home equity out of their existing home to down payment on the new one and when the old ones sells, all gets paid off but to your question:

A bridge loan is short term financing when you need cash fast. The repayment is also generally less, can be anywhere from 6 mos to 3 yrs, generally.

They need to be backed by collateral, ie- the home.

Simply it briges the gap when you need money for something but do not have it as you are waiting to sell something else.
Isn't that what I would think about doing? Bridging to have some money for the new home purchase, which I wouldn't have without the bridge loan, until my house sells? Then I'll pay everything off - current mortgage + loan and balance on new house? OK. I'll wake up in a few minutes but that would be my ideal situation.

Are you saying that I can do that with a regular ole home equity loan? (that's running about 7.50% with my current lender)

No matter, Bridge or Equity, I'd have to be paying 2 mortgages (new & old) plus Bridge or Equity all at the same time?????? OMG Tell me that's not so. I just realized all this.
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Old 11-03-2006, 12:32 PM
 
Location: Waxhaw, NC
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From what I understand, a bank will not give you a home equity loan if your house is on the market. A bridge loan may be your only option unless you take your house off the market temporarily while you apply for an equity loan.
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Old 11-03-2006, 05:37 PM
 
1,035 posts, read 2,649,825 times
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Quote:
Originally Posted by vpcats View Post
Isn't that what I would think about doing? Bridging to have some money for the new home purchase, which I wouldn't have without the bridge loan, until my house sells? Then I'll pay everything off - current mortgage + loan and balance on new house? OK. I'll wake up in a few minutes but that would be my ideal situation.

Are you saying that I can do that with a regular ole home equity loan? (that's running about 7.50% with my current lender)

No matter, Bridge or Equity, I'd have to be paying 2 mortgages (new & old) plus Bridge or Equity all at the same time?????? OMG Tell me that's not so. I just realized all this.
You don't always have 2 payments, if you took out an Home Equity on your current home, many have the option of interest only for the first x amt of yrs so that additional payment would be small.

As for bridge loans, one of the negatives is that they usually carry higher interest rates and fees but the postive for some if that you do not have to make monthly payments - there are several types of bridge loans -
some you do need to make the payments -

to make it a little easier for you to understand here is a link that explains it better then I can - hope this helps

http://www.realestatejournal.com/buy...04-cullen.html
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Old 11-03-2006, 05:46 PM
 
Location: Springfield, Missouri
2,814 posts, read 12,058,602 times
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Quote:
Originally Posted by vpcats View Post
Anyone knowledgeable about this type of loan? If I want to relocate - duh and I find my new home but haven't sold my old home but I would like to be mortgage free in my new home when my old one does sell, what advice do the experts have regarding Bridge loans? The good, the bad, and the ugly, please. I wouldn't mind having a little bitty "debt" but would like to put most of my eggs into the new location. Thanks!!!
Honestly, I'd absolutely avoid buying another home until you sell the one you're in. If you plunge ahead, a bridge loan is short-term and usually high interest. You could end up living with two mortgages. It's a nightmare that could bankrupt you. Sell the house you're in first. Do not buy another with the first one unsold. This is not June of 2005, this is November 2006 and it's a wholly turned around housing market with over four million homes for sale around the nation and prices falling. Just be very careful, very careful. Do not do a bridge loan. You'll regret it so much if you do. It's better to get a line of credit on the house before you sell it than get a bridge loan down the road. Either way, the smartest thing to do is sell what you have before you buy something else or you might find yourself one of those desperate people hemorraging $4000 on two mortgages and a bridge loan...plus...all your other expenses like a car loan and credit card payments. In the meantime, you still need money to pay heat, electricity, water bills, property taxes, groceries, gas, etc. It adds up. It's just not worth the stress or being made so impoverished when it could have all been avoided. Go to open houses of comparables near you. Look at what people are asking for homes like yours. Price yours below that. Sell it first. Buy after you've already closed the sale on your former.
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Old 11-03-2006, 09:08 PM
 
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Quote:
Originally Posted by MoMark View Post
Honestly, I'd absolutely avoid buying another home until you sell the one you're in. If you plunge ahead, a bridge loan is short-term and usually high interest. You could end up living with two mortgages. It's a nightmare that could bankrupt you. Sell the house you're in first. Do not buy another with the first one unsold. This is not June of 2005, this is November 2006 and it's a wholly turned around housing market with over four million homes for sale around the nation and prices falling. Just be very careful, very careful. Do not do a bridge loan. You'll regret it so much if you do. It's better to get a line of credit on the house before you sell it than get a bridge loan down the road. Either way, the smartest thing to do is sell what you have before you buy something else or you might find yourself one of those desperate people hemorraging $4000 on two mortgages and a bridge loan...plus...all your other expenses like a car loan and credit card payments. In the meantime, you still need money to pay heat, electricity, water bills, property taxes, groceries, gas, etc. It adds up. It's just not worth the stress or being made so impoverished when it could have all been avoided. Go to open houses of comparables near you. Look at what people are asking for homes like yours. Price yours below that. Sell it first. Buy after you've already closed the sale on your former.
Wow! There's a resale home in Huntersville that I absolutely love and am really scared of missing out on it because my home in AZ hasn't sold yet. At the beginning of this thread, I was thinking, "Hmmm.... Maybe another option for us!" Then I read your post and is scared me back into reality. What's meant to be will be, I suppose.
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Old 11-03-2006, 09:44 PM
 
Location: Springfield, Missouri
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Quote:
Originally Posted by Cynamo View Post
Wow! There's a resale home in Huntersville that I absolutely love and am really scared of missing out on it because my home in AZ hasn't sold yet. At the beginning of this thread, I was thinking, "Hmmm.... Maybe another option for us!" Then I read your post and is scared me back into reality. What's meant to be will be, I suppose.
Didn't mean to scare you Cynamo AZ homes are an interesting part of the market right now as the inventory in the Phoenix Multiple Listing has risen from approximately 8000 single family homes in June 2005 (I think that's the June figure, it might be August 05 too...I forget...somewhere in there) to over 50,000 now for sale.... from 8000 houses to fifty thousand houses for sale in the same metro area...that's huge. That means that instead of buyers competing for houses, they're faced almost with an overwhelming selection and prices are coming down accordingly. The flippers and investors are being crushed financially who got caught out owning the homes they bought as flips and investments and are trying desperately to unload them while new housing construction is offering incredible discounts to move unsold new homes. I keep up on the market out of sheer interest. I'd been following it for a couple of years from Las Vegas where I owned a home in Henderson. I worried about a broad market decline beginning in mid-2004, but I wasn't in a position to sell my house then and I was afraid to leave the comfort of my income at the banking job I had. I was also greedy and thought...well...hang on just a bit longer and make more money when the time comes! So, I took a chance by waiting. It cost me nights of sleep. I had no other debt or loans other than my mortgage, and even my mortgage was manageable at about $152,000 as I'd paid quite a bit down by making principle payments on top of my regular monthly payments. But, I was sure that prices would decline and that the frenzy would end and I didn't want to lose the opportunity to convert that bubble money into real cash and then use it in my dream state to live free and clear. So, after I came back to the USA in Feb. 05 (I'd been sent to the Philippines (gag gag gag puke gag) for a few months for a job assignment, I started watching the market very closely in Las Vegas. When the MLS sfh (single family home) inventory hit 8000 (it had been less than 4000 in early 2004 before the first big increase in home prices), I decided to act. I put my house on the market after making realtors bid for my business (possible then! I got full service at 4%!!). I sold after a frenzy and seven offers in two days. Even I was shocked. I made bank off that house. I gave two weeks notice and moved to Missouri and bought this for cash on 4.3 acres. The people I bought it from had two houses and two mortgages and were hemorraging money for both mortgages. They'd also just put on a new roof, bought a new water heater, new carpets thoughout the bedrooms and living room, and repainted the entire house in a fresh coat of paint as well as restored windows. They'd put a lot of money into updating the house and did a beautiful job. I got the house for $13,000 less than they were asking after having made an initial offer they rejected. They finally came back to me after a month and said..Please, we'll take your first offer, so more cash stayed in my bank account:

I got out in June of 05 from Las Vegas which in retrospect turned out to be the apex of the housing market. If I had waited only a couple of months, I'd have had my house on the market for months as the market turned pretty quickly. It's gotten even worse since then as I sold at 8000 sfh's listed as inventory on the MLS in Las Vegas, it's over 24,000 now. So it's a lot like Phoenix and other cities around the nation.
The reason I was so adamant in my other posting you responded to is that the market has changed and the inventory is still rising and the prices are beginning to actually drop. So not only is it taking months, sometimes a year, to sell a home, waiting to buy is turning out to be advantageous to the buyer as by the time you sell your home, it's probable that the house you want will have undergone a price cut. Or, if that house did sell, there are 100 others just as magical that have been placed on the market now at even lower prices that would charm and dazzle you too! It's true last year one could put one's house on the market then buy a new one and the other would sell quickly. But those days are gone and those who get caught in that trap are really asking for financial heartache. It's so easy to avoid. Just remember that there are zillions more dream houses on the market now and more coming up for sale. You don't have to jump...and...waiting may save you money as you try to sell what you have.

Last edited by MoMark; 11-03-2006 at 09:53 PM..
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Old 11-03-2006, 10:22 PM
 
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Wow MoMark! Let me start by saying your new home is gorgeous! One of the reasons I'm leaving AZ is to move somewhere where green actually exists, outside of a few cacti and bank vaults. Your lot looks amazing!

Second... I know, I know... patience is a virtue, just not one of mine. Thankfully, although I tend more to gripe about it, I have a pessimistic (he says realistic) husband who won't allow me to make such rash decisions, which would ultimately put us in a place we don't want to be... broke!

The market here does suck pretty bad right now. On average, one or two homes sell in my zip code each week which are close to mine (+- $50k). There are close to a hundred for sale, though. I've done the math. Not good at all. So I'll just wait and pray and hope for the best. Hopefully one day soon I'll be saying, "Ahhh.... so THIS is what people meant by 'humidity sucks!'"
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