Using Bridge Loans To Buy A Home
Are you a homeowner interested in selling a property that you currently own and purchasing a different property, and want to know more about using the money from that sale to buy a new home? This type of situation can sometimes cause financial stress because of the sale and purchase dates misaligning, however, there is a type of loan that can assist you. A bridge loan can provide home financing for borrowers who are unable to tap into anticipated funds from a home sale when they need it. If you are interested in purchasing a property in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, and are interested in learning more about your financing options, Foundation Mortgage is here to help. Continue reading to better understand how a bridge loan can help you purchase a home.
What Is A Bridge Loan?
A bridge loan is intended to assist a homebuyer in obtaining financing for a property while they are in the process of selling a home that they currently own. Bridge loans are backed by collateral, which usually involves another piece of real estate or business inventory to help secure the loan. They let borrowers access the equity from their current home to help afford the costs of a new one, and this can include the down payment amount and closing costs. These types of loans generally need to be paid back within one year, and a borrower usually pays off a bridge loan by using the capital from the sale of their previous home. It is important to understand that bridge loans typically have a higher interest rate than other loan types, and if a homeowner has not paid off their original mortgage, they will be required to make two monthly mortgage payments until that home is officially sold.
What Are The Advantages Of Obtaining A Bridge Loan?
There can be several benefits to using a bridge loan. First of all, using a bridge loan can often give a buyer an advantage over other potential buyers because the funding can be approved quickly, allowing for an expedited home sale. It can also help a buyer afford a down payment of twenty percent, which can save the buyer a significant amount of money by avoiding private mortgage insurance costs. Bridge loans also offer the flexibility to buy a different home while still owning a different property. Bridge loans can also offer convenience for borrowers that need to relocate immediately, and can be an advantage because sellers may support your offer since it is not contingent on the sale of another home.
If you are interested in using a bridge loan to purchase a new property in Knoxville, Maryville, Lenoir City, Oak Ridge, or Gatlinburg, Tennessee, contact Foundation Mortgage today for a consultation.
