When it comes to home financing, a diverse array of loan types awaits homeowners. Among them is the bridge loan, a distinctive option with its own set of advantages and drawbacks.
Let's discuss the nuances of bridge loans, find out how they work, their benefits and disadvantages, and some alternatives to bridge loans.
A bridge loan is a short-term solution, often used to bridge the financial gap between purchasing a new home and selling your current one. This type of loan comes into play when the need to buy arises before the sale of your old property is finalized.
Due to the higher risk involved, bridge loans come with more stringent requirements than other mortgage loans due to their higher interest rates and swift repayment schedules. Meeting eligibility criteria may entail a higher credit score and a lower debt-to-income (DTI) ratio.
Once you secure qualification, you can acquire a bridge loan and employ it to purchase a new home or handle payments while retaining ownership of two properties until your old one is sold. It's important to note that bridge loans require swifter repayment than most home loans, often requiring settlement within 6 to 12 months following the loan initiation.
Bridge loans are only suited for some situations. Let's review some pros and cons to help determine whether you should consider a bridge loan.
Given the potential drawbacks of bridge loans, alternative financing options warrant consideration. Here are a few alternatives designed to offer more flexibility and potentially lower rates:
Home Equity Loans: Leveraging the equity in your current home through a lump sum payment can provide financial support for purchasing a new property before selling your existing one.
HELOC (Home Equity Line of Credit): With lower interest rates, a HELOC allows you to borrow against your home's equity, providing a more flexible line of credit.
Personal Loan: Although not recommended, a personal loan can work, though collateral might still be required.
Remember that consulting with a trusted mortgage professional is the best approach for determining which loan works for your unique situation. Compare your mortgage options today to begin your homeownership journey fully informed and prepared.
We've been helping customers afford the home of their dreams for many years and we love what we do.
Company NMLS: 101770
Personal NMLS: 49242
12411 SE 2nd circle
Vancouver, WA 98684
NW Funding Group- Bill Black strives to ensure that its services are accessible to people with disabilities. NW Funding Group- Bill Black has invested a significant amount of resources to help ensure that its website is made easier to use and more accessible for people with disabilities, with the strong belief that every person has the right to live with dignity, equality, comfort and independence.
NW Funding Group- Bill Black makes available the UserWay Website Accessibility Widget that is powered by a dedicated accessibility server. The software allows billcblack.com to improve its compliance with the Web Content Accessibility Guidelines (WCAG 2.1).
NW Funding Group- Bill Black accessibility menu can be enabled by clicking the accessibility menu icon that appears on the corner on the page. After triggering the accessibility menu, please wait a moment for the accessibility menu to load in its entirety.
NW Funding Group- Bill Black continues its efforts to constantly improve the accessibility of its site and services in the belief that it is our collective moral obligation to allow seamless, accessible and unhindered use also for those of us with disabilities.
Despite our efforts to make all pages and content on NW Funding Group- Bill Black website fully accessible, some content may not have yet been fully adapted to the strictest accessibility standards. This may be a result of not having found or identified the most appropriate technological solution.
If you are experiencing difficulty with any content on NW Funding Group- Bill Black website or require assistance with any part of our site, please contact us during normal business hours as detailed below and we will be happy to assist.
If you wish to report an accessibility issue, have any questions or need assistance, please contact us by sending an email to: email@example.com