I need a bridge loan

happy@home · #1 08/12/14, 06:45 AM

Does anyone know of a good, reliable bank or credit union who does bridge loans. We want to buy a house and put our current place on the market. We have been approved for another mortage on top of the one for the house we are trying to sell and we can handle the payment s but I would prefer the bridge loan to give us a little more cushion in the budget. We can add extra payments to the new house after we sell the first house to start working on our equity.

If our first house doesn't sell quickly we will be able to rent it out. But being landlords isn't really our first choice.

If we get the bridge loan payments will be lower. Once our first house sells we will convert to a regular loan.

I should say we do not have 50% equity in our first house yet. Just around 30 percent. Will anyone do a bridge loan on that. The only local credit union that has bridge loans requires fifty percent.

Is there anyone, reliable, who gives bridge loans for less than 50%?

Thank you

happy@home · #2 08/12/14, 06:46 AM

If this is not the right forum please redirect me.
Thanks

Wolf mom · #3 08/12/14, 08:45 AM

I'd just start calling around to banks and mortgage brokers in your local area, then go on the web.
If you know a Realtor, that person may know.

happy@home · #4 08/12/14, 08:51 AM

Thank you for your reply. I have looked online for local lenders and contacted about half of them but still can't find one. We will go with an out of state bank if that is possible to get the loan

How do you know a lender is credible?

If anyone knows of a good lender with bridge loans please let me know. I am not a phone person so making a lot of calls gives me anxiety attacks.

FarmboyBill · #5 08/12/14, 09:02 AM

Theres a bridge, 9 miles from me. I suppose the county would loan you. It hasn't been used in 50yrs, so I doubt if they would need it now. lol

TnAndy · #6 08/12/14, 09:11 AM

How does a 'bridge' loan work, versus just getting a mortgage on the second place ?

If the first place doesn't sell, and you end up renting it, does the bridge loan convert to a mortgage on the second place, or do you have to go get a mortgage to pay off the bridge loan ? That surely means more fees, getting two loans.

Even though you've been approved for a second mortgage to buy another house, is that wise ? Are your sources of income, or savings, secure enough that if they got cut, you could handle two loans ?

**clovis** · #7 08/12/14, 09:15 AM

If you follow Dave Ramsey, he says to never do a bridge loan, and I agree. There is too much risk involved.

I know someone who used a bridge loan and borrowed to buy a second home. The sale of their first house fell through, and it sat on the market for almost two years. They made all of those payments for two years, plus the insurance and property taxes, and also the maintenance of the second home.

It almost ruined them, financially.

DAVID In Wisconsin · #8 08/12/14, 09:16 AM

You might try posting this on www.fatwallet.com. Someone there surely can help. And someone else will tell you why it's a very bad idea. Lol

**Terri** · #9 08/12/14, 09:18 AM

I have found the local banks to be more flexible than the big banks are. The local banks try harder because they are number 2, while the big banks simply do not CARE!

crazyfarm · #10 08/12/14, 09:30 AM

Don't do it. It's not smart. Dave Ramsey does not approve of this post!

jtsummie · #11 08/12/14, 10:17 AM

If you do chose to move forward with the loan, there is a good chance the bank where you will get your final loan from will also do the bridge. I worked at a local bank and we would do short term 6-9 month bridge loans while the long term loan was being worked out. Usually however we would only lend up to 75% of the appraised value of the real estate. Most of our bridge loans were unsecured, to be paid off by a secure loan.
I would how ever caution against the bridge loan.

happy@home · #12 08/12/14, 08:05 PM

Edited because I added too much personal information. Thank you for all the information.

crazyfarm · #13 08/13/14, 09:21 AM

Quote:

Originally Posted by happy@home

I will do some more research, thanks for the comments. We can afford both houses, we have always bought homes that cost about 1/4 of what we were approved for. We have always had long distance moves so we sold the house and rented in the new location before buying. We were planning to list our current house in the spring, my health issues are making the stairs very hard for me. The new house is exactly what we want, we just stumbled onto it. There won't be anything comparable in the spring, i have been looking at houses and listings for years and this is the first in the area that is right. We can get a regular mortgage on both houses. We were told a bridge loan would be much better and cheaper. Does anyone have a good article on why bridge loans are bad?
We plan to try to sell house 1 first but if we don't sell in our timeframe we will rent it. That is not what we want to do. We prefer to sell. We can easily make it into a duplex if we want to or leave it alone. Whatever brings in more money.

My health issues are what is making moving into house 2 our plan if our offer is accepted.

Job security is very good. We have good disability and life insurance on my husband. I have enough life insurance as well to cover me. We stupidly didn't consider disability for me years ago.

We have plenty in savings to pay off one house with cash if we need to. With some leftover. We don't want to wipe out savings unless desperate though.

So any articles that explain why we don't want the bridge loan? I would love to read up on it.

I suppose if you are financially able to handle 3 loans (2 mortgages and a bridge) that is nice. Dave doesn't recommend it because most people could not sustain that many loan payments and it is what he considers a "stupid tax". Aka Money you pay out because you were too stupid to know better. Since Dave Ramsey is all about being debt free he never advocates for anyone taking on loans. I think he is pretty darn smart and has done us very well so I trust his opinion on the matter myself. It's always better to sell 1 before committing to another.

rambler · #14 08/13/14, 12:12 PM

I don't know so much about it.

I think if you can afford to do without the loan then it probably isn't a problem for you to take it on. Very few people fall into that, and for those on the edge of what they can afford a bridge loan is putting thrm ever more over the loan, it puts off paying what you owe with no assurance that your asset will increase in value as you pay extra loans on it...

If you can afford to do without the loan, then maybe why are you getting the loan? You are paying interest for something you don't need.......

Perhaps you don't want to disrupt your current investments and with interest currently so low, and if the wheels fall off then you can cash in investments and get out from the loan. Obviously you have given the details more consideration than we have.

Paul