Help Please: Bridge Loans
 

Cindy,

A bridge loan is loan that "bridges" the gap between the purchase of a
new home and the sale of the your current home. Your current home is
used as collateral and the money is used to close on the new home
before your current home is sold. Some are structured so they
completely pay off the old home's first mortgage at the bridge loan's
closing, while others pile the new debt on top of the old. They usually
run for a term of six months.

Because they are considered short term, interest rates will be higher
the taking a regular mortgage, but some only require interest payments
and some require no payment at all until the property is sold.

Taking out a HELOC is another option, but that all depends on how much
equity you have in your home and whether or not you have a credit score
in excess of 620.

HELOCs should only be used for short term lending (for a number of
reasons I want list here) and is a relatively cheap and fast way to
create your own bridge loan.

Because the rates are higher on the bridge loans, borrow only what you
need; closing costs, down payment, moving costs, etc.

How you structure your new purchase is an important consideration as
well. I would suggest that you consider a piggyback loan like an
80-10-5. Let's assume that you have 30K in equity and you are
interested in purchasing a 150K home and take out a 7,500 bridge loan.
The first mortgage would be for 120K (80%), the second mortgage would
be for 22,500 (10%) and the 7,500 (5%) would come from your bridge
loan. Once you sell current home, pay back the bridge loan (7,500) and
the 2nd mortgage (22,500) with the equity from the sale (30K), leaving
just a 1st mortgage for 120K.

Hope this helps; if you need any further assistance, please don't
hesitate to contact me.

P.S. Thinking about getting a new mortgage or refinancing an existing
one? Join the Interest Rate Investigator Newsgroup to determine if you
should lock or float with the Mortgage Interest Rate Watch.

To Join, click here
http://groups.google.com/group/Inter...ubscribe?hl=en

Regards,

Scott Miller
National Commercial and Residential Lender

1.877.716.6495

www.RealEstate-IQ.com
www.EZMortgageLoanz.com