 |
|
 |
Debbie Siegel's Mortgage Minute
Is a Bridge Loan a Good Idea?
A bridge loan is exactly what it sounds like, a tool to span two separate
loans. In real estate, a bridge loan allows investors to span the gap
between their old and new loans.
For an investor who finds a desirable property but needs to sell an
existing property to afford the new one - and the closings don't coincide
- a bridge loan can be a valuable tool. But it can also be expensive, so
make sure you have the facts before you jump in.
When acquiring a bridge loan, you use some of the equity in your existing
property as collateral. A bridge loan may be structured to completely pay
off the existing property's mortgage or, it may be set up to add new debt
to the existing loan. Either way, keep in mind that lenders require that
you have a binding contract of sale on the existing property to qualify
for a bridge loan.
A bridge loan is expensive for two reasons:
* Next 37 17 investors only!
- Closing costs, points and six months prepaid principal, interest and
taxes (on the existing home) are included in the loan. (If you sell your
home within the first six months, you receive a credit for the prepaid
funds.)
- The mortgage on the new property must be financed by the same lender
who extended the bridge loan. The rate offered will be higher than what
would typically be available under a standard mortgage.
Other Options
A bridge loan may in fact be your best option, however given its higher
costs and restrictions, other fund sources may be preferable. Check into
your ability to borrow from your 401K, stocks, bonds, insurance policies
or even a home equity line on your existing home before committing to this
approach. And of course, don't forget the old standby... friends and
family!
Got questions about real estate financing? Contact
Debbie@westchester-mortgage.com
or 617-965-1236. She'll consider them for
inclusion in a future column. Debbie Siegel is president of Westchester
Mortgage in Newton, Mass. She is licensed in several Northeastern states.
Did you like this article? You May Also Like:
 |
Professional Profile: Using ForeclosuresMass.com Can Ease Mortgage Woes for Investors says one Mortgage Company President
Gary Yi, Secure Mortgage Corp.
Gary Yi, President of Secure Mortgage Corporation is a very busy man these days. Lower interest rates have caused a boom in purchases and refinancing. There are some tricks to buying foreclosed property that could make the process easier if you are looking for financing...
|
 |
Interview with the Expert: Don't Let Mold Become *Your* Problem
Steve Goselin, EnviroTech Clean Air, Inc.
Finding mold in a building can literally bring a real estate deal to a crashing halt. No matter how much or how little mold there is, as the seller you’re responsible for clean up – or selling the property “as is” with full disclosure. In his article, mold remediation expert Steve Goselin explains why mold is causing problems in the real estate industry and what you can do to ensure it doesn’t become your problem.
|
 |
Feature Article: Letters to Homeowner Prospects: 6 Rules Will Get Them Read... and Answered!
Ken Lizotte, CMC
Of all forms of writing, letter-writing may be the toughest. After all, who reads letters anymore, let alone writes them? Most of us frantically clip thru our snail mail as quickly as possible, casting 90% of it unopened into the trash. Thus, any letter you send to a foreclosed homeowner must grab your recipient's attention at once, hold his or her interest and (best case scenario) motivate your reader to action...
|
 |
Legal Corner: Banks are willing to work with investors to find equitable solution
Bob Tenney, Cunningham Machanic
Bob Tenney, attorney at Cunningham Machanic in Natick, is on the frontline of the foreclosure process. Tenney and his firm review claims by lenders to review properties for foreclosure. If proper conditions are not met...
|
 |
Legal Corner: Banks are willing to work with investors to find equitable solution
Bob Tenney, Cunningham Machanic
Bob Tenney, attorney at Cunningham Machanic in Natick, is on the frontline of the foreclosure process. Tenney and his firm review claims by lenders to review properties for foreclosure. If proper conditions are not met, they are also the folks who send out demand letters—the step that begins the foreclosure process for the homeowner. "We send the demand letter and give the homeowner time to reinstate their loans. If that doesn't happen we proceed with the foreclosure," says Tenney...
|
 |
Interview with the Expert: Helping Families Get Back on Track Financially After Foreclosure
Jennifer Matthews, Founder, Creating Financial Literacy, LLC
You can play a key role in helping clients get back on their feet both financially and emotionally by understanding the challenges they face. According to Jennifer Matthews, an advocate for those who have been through foreclosure, often times people lack basic financial literacy and management skills - the lack of which contributed to their financial woes. In this livley article, Jennifer Matthews provides the essential tools consumers need to increase their financial literacy, repair their credit, and recover from foreclosure.
|
 |
Feature Article: Five Strategies for Successfully Negotiating Short Sales
Elizabeth Weintraub
As any seasoned investor can attest, dealing with banks on short sales requires a large bottle of aspirin and the wisdom of Solomon. Real estate broker-associate Elizabeth Weintraub gives you the low-down on how to successfully deal with banks - everything from dealing with confrontational bank agents and writing contracts to proving to the bank why you're the best buyer.
|
 |
Feature Article: Three Steps to Rebuilding Your Credit After Foreclosure
Stephen R. Elias, Attorney
Gone are the days when rebuilding one's credit history after going through bankruptcy or foreclosure was straightforward. With the crash of the sub-prime lending market, consumers are under intense scrutiny when applying for mortgages and credit cards, which means rebuilding credit can now take three to five years - or longer!. In his article, bankruptcy attorney and author Stephen R. Elias provides three key steps that you can pass on to your clients who need advice on how to recover from foreclosure.
|
 |
Success Story: Husband and Wife Team Know it Pays to be Sincere when Making Deals
Jeremy Cyrier, The Cyrier Sales Team
As a real estate broker and investor, Jeremy is always on the lookout for good investments for both himself and his customers.
Through weekly emails from ForeclosuresMass, Jeremy is notified of foreclosed properties listing up-to-date, accurate data. Not too long ago, Jeremy was notified of a foreclosed apartment complex that peaked his interest. This is what transpired...
|
 |
Legal Corner: Do your Homework before Investing
Suzanne Brunelle, Portnoy and Greene, PC
So, you heard you could make a financial killing or find your dream home buying property at foreclosure? That may be possible, but first you need to beware the pitfalls of the novice and, as my father always said, "Do your homework"...
|
|
|