Bridge loans

[Anonymous]

Anyone have experience using a bridge loan and/or recommend a lender?
I want to pay cash for next house, but need the equity from current house, and don’t want to rent temporarily.

[Anonymous]

We did this recently, and used First Savings Mortgage. The interest rate was around 9.9%.

[Anonymous]

Thanks, do you mind sharing the upfront costs (% of loan) and if your overall experience was positive?

[Anonymous]

Why not get a mortgage on the 2nd house and pay it off when you sell your first one? That's what we did.

[Anonymous]

Anonymous wrote:Why not get a mortgage on the 2nd house and pay it off when you sell your first one? That's what we did.

Not OP but cash is helpful when you need to win a bidding war.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not get a mortgage on the 2nd house and pay it off when you sell your first one? That's what we did.

Not OP but cash is helpful when you need to win a bidding war.

We took out a HELOC on our first home to use as cash. We paid it back when we sold the first home.

[Anonymous]

OP here. Did the HELOC cover the full purchase price of new home? If I went this route would have to supplement by liquidating assets, which I don’t really want to do.

[Anonymous]

Why do you want to pay cash? If you income suffices, you could get a HELOC on the current house and a mortgage on the new one (waiving finance and appraisal contingency, and maybe more), and pay both off with the proceeding of the sale.

[Anonymous]

Will look into it. Guess my understanding was that a cash offer would beat out those other financing combinations

[Anonymous]

A true bridge loan is a loan used to buy the new house that is collateralized as a second mortgage on the old house and the new house. The equity in the old house effectively allows 100% financing. Then when the old house is sold the mortgage is paid down. It doesn’t have to be refinanced but commonly is because you can get better rates on a non bridge loan.

Eaglebank does them.

[Anonymous]

Anonymous wrote:Will look into it. Guess my understanding was that a cash offer would beat out those other financing combinations

DP but as a seller, I didn’t really care about all cash vs a lot of cash. Really as long as the financing was super solid and not at risk from an appraisal, I was good.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Will look into it. Guess my understanding was that a cash offer would beat out those other financing combinations

DP but as a seller, I didn’t really care about all cash vs a lot of cash. Really as long as the financing was super solid and not at risk from an appraisal, I was good.

+1 We never cared if the buyer got a loan. Just put a high down payment, no financing or appraisal contingencies, and proof of finances that show you'll more than qualify for the loan. Cash with a 2 week closing would win if all else is equal though, but that's not always on the table.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not get a mortgage on the 2nd house and pay it off when you sell your first one? That's what we did.

Not OP but cash is helpful when you need to win a bidding war.

Probably not much of an advantage over putting down70% or whatever.

[Anonymous]

Bridge loan? Call Bill Rozek with Embrace Home Loans in Rockville. 301-325-6399. There are other programs available to make you a cash buyer as well

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why not get a mortgage on the 2nd house and pay it off when you sell your first one? That's what we did.

Not OP but cash is helpful when you need to win a bidding war.

This is often true but it depends on what the seller values. Cash is helpful if all else is equal, but often it's not. We selected one of the offers that needed a loan over a cash offer. The buyer getting the loan had a higher offer price (with proof of funds, pre-approval, no financing contingency, inspection for informational purposes only), and we valued price above all else.

For a different sale, we sold off market to a cash buyer for the asking price. They wanted a 2 week closing, but we couldn't move out that quickly. We wouldn't have cared if they were in good financial shape and needed a loan.