Individuals selling and purchasing at the same time may face challenges with reconciling both transactions, particularly in competitive real estate markets. Bridge loans can be a useful solution to this dilemma. The information below on Southern NH bridge loans – what are bridge loans will assist you with understanding this financing option.
Southern NH Bridge Loans – What Are Bridge Loans
Many homeowners have equity in their existing property. There can be a gap in the date those funds are available if a property purchase must be finalized before the existing home closing. Bridge loans are a solution to bridge that gap. It is a substitute for home equity loans (since many lenders will not permit home equity loans on homes on the market).
The review process and qualifications for bridge loans may differ from typical loans. Because bridge loans are short-term, they are not normally sold to the secondary mortgage market and thus do not need to use the same provisions. Credit scores, ratios, and other financial factors will vary from one bank to another. During the time frame of the bridge loan, the homeowner will essentially maintain two home loans (one on the old home and one on the home purchased). Thus, qualifying to afford both mortgages is a consideration.
Evaluating the Advantages & Disadvantages of Bridge Loans
Bridge loans allow individuals to purchase and list without the added stress of contingencies on both transactions and requiring same day closings. This can often result in additional negotiation leverage or bring together transactions that may otherwise fall apart. It also makes the packing and moving coordination less cumbersome by eliminating the need for temporary storage in same-day closing scenarios. On the downside, not all borrowers will qualify for bridge loans. They are also more costly than home equity loans. Individuals should evaluate these factors with the assistance of both real estate representatives and mortgage advisors.
The First Step
Whether you should request a bridge loan should be based on your financial and real estate goals. A local mortgage company that provides bridge financing can provide more comprehensive information beyond the Southern NH bridge loans – what are bridge loans above.