Mortgage Bridge Loans
Buying a new house, when you currently own one can be a juggling act of trying to time the selling of your old home and the buying of your new home to occur within an exact time frame without owning both homes or leaving yourself homeless. This can severely limit your options as you have a very small window of time after selling your home to actually find a new one and still give the new transaction enough time to close on the same day as the old. This means you have only the houses that are on the market in that short 2-4 week window in which to find your dream home, or risk moving out the closing date of your old home.
Mortgage Bridge Loans can help buy you some time in between and take a bit of the pressure off. These loans are what the name implies - a bridge between buying one property and selling another. If you want to leisurely search for your dream home without being pressured for time and then worry about selling your home later, then one of these loans might be for you.
Mortgage bridge loans must be obtained by the lender that you are using for your new house. You can either get one to pay off the amount owed on your old house, or add the two debts together. This loan is a short term loan and is paid off when the house sells so you will only have to worry about the big payments for a short time.
Of course, mortgage bridge loans have a cost. The lender usually expects a huge amount of prepaid interest which can be as much as 6 months - after all they do need to make some money on the loan and if your old house sells right away, they want to be covered. The rates and fees can be pretty high on this type of loan, so it is not for everyone.