Is The Closing Date For A New Home Approaching? Use Bridge Financing For Your Down Payment
At times, when you buy a home, it may reach a point where you want to sell it. It is unlikely that you will stay in your first home forever meaning for whatever reason, you may want to sell it and buy another one. People change their mind, and it can happen that you want to upgrade your living standards and move to a better house. Homeowners sell their existing homes and use that equity to purchase new houses. However, a situation may arise where a purchase deal for the home you want to buy closes sooner than the deal of existing house you are selling. In that case, you might find yourself cash trapped and on the brink of losing the new house you have admired, and you do not want to lose it. That is where bridge financing by an investor like Tony Hartman comes in handy.
How bridge financing can save you when buying a new home
Bridge loans are short-term financing that help seal the gap between the selling price of a new home and that of a new mortgage of the new home when the existing home has not sold yet. Such kind of loan is secured to the existing home of the buyer. That money obtained from a bridge loan is used to make a down payment on the new home. Tony Hartman is a real estate investor and also to listing homes, he also, through his finance group in Colorado, helps in bridge financing.
The gap in selling and buying a home
When you purchase a new house, and the current home hasn't sold, you may find yourself in an uphill battle in making the down payment on the home you are purchasing. With a closing date approaching for the home you want to buy, you might find that you do not have the money to pay as a down payment for your new house. You are likely to lose that opportunity meaning you might have to start all again.
However, it makes it easy for you to transition from the old to the new home if you use a bridge loan. This loan is not a conventional bank loan but a private loan offered by a lender. Now that the money you could use to make an initial payment is still held in the equity of the existing home, which hasn't yet sold, one choice you can have it to opt for bridge loan.
An investor such as Tony Hartman who offers bridge financing can be of great help during these desperate moments. That said, as the adage goes, desperate times call for desperate measures, you may need to brace yourself for untypical lending terms than the ones you would get from a bank loan. This is loan facility you are obtaining as an emergency loan to save you in some difficult financial situation you are in. Therefore, you might pay higher interest rates.
A lender like Tony Hartman and his finance group will offer you the bridge loan and use it toward the purchase of the new home until that time the existing house sells. For example, if the sale of your home is closing at 60 days meaning that is when you get the full equity of the home, and you purchased another house that needed to be paid in 45 days, you may use the bridge loan to cover the cash flow for the 15 day gap.