Homeowners selling one home and purchasing (or building) another can be challenged with coordinating both events, particularly in competitive environments. Bridge loans can be a great solution to this problem. The information below on Massachusetts bridge loans – overview of bridge loans will help you with understanding this financing alternative.
Massachusetts Bridge Loans – Overview Of Bridge Loans
Many homeowners have equity in their existing property. There may be a gap in the date those funds are available if a property purchase must be finalized prior to the old real estate closes. Bridge loans are a solution to bridge that gap. It is an alternative to a home equity loan (since many banks will not permit home equity financing for properties already marketed for sale).
The underwriting process and criteria for bridge loans may differ from typical loans. Since bridge loans have short lengths of time, they are not typically submitted to the secondary mortgage market and as a result do not need to comply with the same provisions. FICO scores, debt-to-income ratios, and other approval criteria can vary from one bank to another. During the length of the bridge loan, the homeowner will essentially maintain two mortgages (one on the hoem listed for sale and one on the home purchased). Therefore, qualifying to carry both mortgages is a consideration.
Weighing the Advantages & Disadvantages of Bridge Loans
Bridge loans enable homeowners to purchase and sell without the use contingenies and requiring simultaneous closings. This can sometimes provide additional negotiation power or facilitate contracts that may otherwise not work out. It also makes the packing and moving coordination less cumbersome by removing the need for interim storage in same-day closing scenarios. On the downside, not all borrowers may qualify for bridge loans. They also have more closing costs than home equity loans. Buyers and sellers should weigh these factors with the assistance of both real estate professionals and loan officers.
Whether you should request a bridge loan should be based on your financial and property buying and selling goals. A local mortgage company that offers bridge financing can give you more detailed details beyond the Massachusetts bridge loans – overview of bridge loans in this blog. Contact the Ken Chase at the Atlas Companies for bridge loans and other useful financing alternatives.