Homeowners selling and buying simulataneously may face challenges with reconciling both events, especially in competitive real estate markets. Bridge loans are an alternative for individuals experiencing this problem. The information that follows on NH bridge loans – overview of bridge loans will help you better understand this financing option.
NH Bridge Loans – Overview Of Bridge Loans
Many homeowners have equity in their property. There may be a gap in the date that the equity is available for use if a real estate purchase must be completed prior to the existing property closes. Bridge loans are a solution to bridge the gap. It is an alternative to home equity loans (since most lenders will not approve home equity loans on properties already listed for sale).
The review process and qualifications for bridge loans can differ from conventional mortgages. Since bridge loans have short lengths of time, they are not typically submitted to the secondary market and therefore do not need to use the same standards. Credit scores, debt-to-income ratios, and other qualifying factors will vary from one bank to another. During the length of the bridge loan, the borrower will essentially carry two home loans (one on the existing home and one on the property purchased). Therefore, the borrower must qualify to carry both.
Weighing the Advantages and Disadvantages of Bridge Loans
Bridge loans enable homeowners to buy and sell without the added stress ofhome sale and home purchase contingenies and requiring simultaneous closings. This can often result in additional negotiation leverage or facilitate transactions that may otherwise fall apart. It also makes the moving coordination less stressful by eliminating the need for temporary storage in same-day closing situations. On the other hand, not all homeowners may qualify for bridge loans. They also have more closing costs than home equity financing. Individuals should evaluate these pros and cons with the guidance of both real estate professionals and mortgage consultants.
The First Step
Whether you should obtain a bridge loan should be based on your finances and real estate situation. A local mortgage company that offers bridge financing can provide more detailed information beyond the NH bridge loans – overview of bridge loans shown above.