There are several reasons to refinance your mortgage—to lock into a lower interest rate, shorten the terms of your mortgage, switch to a fixed-rate loan from an adjustable-rate, consolidate debt, and more. New Era Bank is happy to help you through all steps of the refinancing process. Reach out to us and we’ll help you get started.
A bridge loan is used when someone is already a homeowner and wishes to buy a new house without waiting for their current house to sell. The bridge loan uses the equity already established in the house you own towards the down payment of a new home. For example, say a person owns a $100,000 house that they’ve established $50,000 in equity. They can use the $30,000 of the equity in their current home for a down payment on a $150,000 house. Once the old home sells, the buyer will pay down the loan by an amount necessary to leave a minimum of 20% equity in the new home. Terms of a bridge loan can be 91 days to 1 year. Generally these loans are secured by the property being sold, but it is possible to secure it with the property being purchased and are typically interest only.
In a practical sense, these loans can keep you from missing out on the house you want. It can also help you in a bidding war—if another buyer has a “contingency to sell” and won’t be able to buy the new house until their current house sells, then a seller might find your non-contingent offer more attractive. If a bidding war is unlikely and the seller isn’t in a time crunch to sell, a bridge loan can be avoided altogether by making your contract contingent upon the sale of the old home.
Reach out to a loan officer to find out if a bridge loan is right for you.