Move Up with a Bridge Loan and bridge the gap in financing between your current home and your dream home!
Buying a new home before you can sell your old one can present quite the financial conundrum. This is mostly because you have to come up with the cash for a new property when you don’t have access to the home equity you have already built up in your existing property. That’s where a bridge loan comes in.
What is a Bridge Loan?
A bridge loan, also called a “wrap” or “gap financing,” allows borrowers to purchase new property by accessing the equity in their current property before it’s sold.
How does a Bridge Loan Work?
While bridge loans can come in different amounts and last for varying lengths of time, they are meant to be short-term tools. Generally speaking, bridge loans are temporary financing options intended to help real estate buyers secure initial funding that helps them transition from one property to the next.
Let’s say you found your dream home and need to buy it quickly, yet you haven’t had the time to prepare your current residence for sale, let alone sell it. A bridge loan would provide the short-term funding required to purchase the new home quickly, buying you time to get your current home ready for sale. Ideally, you would move into your new home, sell your old property, then pay off the loan.
Perfect for borrowers in a seller’s market
Fast & flexible underwriting and execution
$500,000 Minimum loan amount
1-4 Unit Single Family Residence
Primary residences, second homes and investment properties
The Fine Print
Property must be listed on MLS
55% maximum LTV
Requires excellent credit - 680 minimum FICO
Higher DTI ratios considered
Bridge loans are the kind of loan you look to obtain when you need to move forward and you can’t do it any other way. If you are dead-set on purchasing a property but struggle to make the financials work, a bridge loan could truly save the day.
As more and more baby boomers enter retirement age, the question of whether or not to sell their homes and move will become a hot topic. In today’s housing market climate, with low available inventory in the starter and trade-up home categories, it makes sense to evaluate your home’s ability to adapt to your needs in retirement.
According to the National Association of Exclusive Buyers Agents (NAEBA), there are 7 factors that you should consider when choosing your retirement home.
“It may be easy enough to purchase your home today but think long-term about your monthly costs. Account for property taxes, insurance, HOA fees, utilities – all the things that will be due whether or not you have a mortgage on the property.”
Would moving to a complex with homeowner association fees actually be cheaper than having to hire all the contractors you would need to maintain your home, lawn, etc.? Would your taxes go down significantly if you relocated? What is your monthly income going to be like in retirement?
“If you have equity in your current home, you may be able to apply it to the purchase of your next home. Maintaining a healthy amount of home equity gives you a source of emergency funds to tap, via a home equity loan or reverse mortgage.”
The equity you have in your current home may be enough to purchase your retirement home with little to no mortgage. Homeowners in the US gained an average of over $14,000 in equity last year.
“As we age, our tolerance for cleaning gutters, raking leaves and shoveling snow can go right out the window. A condominium with low-maintenance needs can be a literal lifesaver, if your health or physical abilities decline.”
As we mentioned earlier, would a condo with an HOA fee be worth the added peace of mind of not having to do the maintenance work yourself?
“Elderly homeowners can be targets for scams or break-ins. Living in a home with security features, such as a manned gate house, resident-only access and a security system can bring peace of mind.”
As scary as that thought may be, any additional security and an extra set of eyes looking out for you always adds to peace of mind.
“Renting won’t do if the dog can’t come too! The companionship of pets can provide emotional and physical benefits.”
Evaluate all of your options when it comes to bringing your ‘furever’ friend with you to a new home. Will there be necessary additional deposits if you are renting or in a condo? Is the backyard fenced in? How far are you from your favorite veterinarian?
“No one wants to picture themselves in a wheelchair or a walker, but the home layout must be able to accommodate limited mobility.”
Sixty is the new 40, right? People are living longer and are more active in retirement, but that doesn’t mean that down the road you won’t need your home to be more accessible. Installing handrails and making sure your hallways and doorways are wide enough may be a good reason to look for a home that was built to accommodate these needs.
“Is the new home close to the golf course, or to shopping and dining? Do you have amenities within easy walking distance? This can add to home value!”
How close are you to your children and grandchildren? Would relocating to a new area make visits with family easier or more frequent? Beyond being close to your favorite stores and restaurants, there are a lot of factors to consider.
When it comes to your forever home, evaluating your current house for its ability to adapt with you as you age can be the first step to guaranteeing your comfort in retirement. If after considering all these factors you find yourself curious about your options, we can connect you with one of the many realtors with whom we have a great relationship. They can help evaluate your ability to sell your house in today’s market and we can help you finance your dream retirement home!
There are many people sitting on the sidelines trying to decide if they should purchase a home or sign a rental lease. Some might wonder if it makes sense to purchase a house before they are married and have a family, others might think they are too young, and still, others might think their current income would never enable them to qualify for a mortgage.
We want to share what the typical first-time homebuyer actually looks like based on the National Association of REALTORS most recent Profile of Home Buyers & Sellers. Here are some interesting revelations on the first-time buyer:
You may not be much different than many people who have already purchased their first homes. Let’s meet to determine if your dream home is within your grasp.
According to the National Association of Realtors’ latest Realtors Confidence Index, 61% of first-time homebuyers purchased their homes with down payments below 6% from October 2016 through November 2017.
Many potential homebuyers believe that a 20% down payment is necessary to buy a home and have disqualified themselves without even trying. The median down payment for all buyers in 2017 was just 10% and that percentage drops to 6% for first-time buyers.
Zillow Senior Economist Aaron Terrazas’ recent comments shed light on why buyer demand has remained strong,
“Looking into 2018, rent is expected to continue gaining. More widespread rent growth could mean home buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.”
It’s no surprise that with rents rising, more and more first-time buyers are taking advantage of low-down-payment mortgage options to secure their monthly housing costs and finally attain their dream homes.
If you are one of the many first-time buyers who is not sure if you would qualify for a low-down payment mortgage, contact a Greenway mortgage professional to get started on your path to homeownership!
There’s a lot of conflicting advice about whether it’s smarter to rent or buy. Some say renting is like throwing money down the drain when you could be building equity in your own home. Others argue there are better ways to invest your cash, and you’re giving up valuable flexibility.
“We typically make big decisions like whether to rent or buy with emotion and defend them with logic, which is why it’s so easy to make a case for either,” explains Dana Bull, a Realtor at Sotheby’s Harborside in Boston.
But there are actually several considerations that can make the decision to rent or buy much easier. Here are five signs you’re ready to be a homeowner.
Enjoy gardening and fixing things up around your place? That’ll make homeownership easier. From coordinating maintenance and repairs to dedicating weekend time to yard work and other projects, owning a home requires a big time investment on top of the financial one. Be sure you’re ready for that responsibility.
“If you’d rather be able to call a landlord to handle issues when they arise, you may be better off renting for now,” says Certified Financial Planner John Piershale of Piershale Financial Group in Crystal Lake, Ill.
After deciding to take the leap, the next step is to save up a 20-percent down payment. This can help you avoid mortgage insurance – rates vary by product and scenario. “If you can save more than 20 percent, even better,” Piershale says. “Taking out a smaller mortgage means you’ll pay less in interest over time.”
If homeownership is a near-term goal, you can take advantage of your flexibility as a renter by finding a roommate or downsizing to a cheaper place to accelerate your savings.
A mortgage is just one home cost to budget for—there’s also taxes, insurance, maintenance and homeowners association fees if you own a condo or townhome. Generally, mortgage lenders want to see all these costs add up to no more than 28 percent of your income, Piershale says. (You can get estimates on sites like realestate.com.) It shows you can comfortably afford home costs and other living expenses, as well as repairs that may come up.
Don’t have that much wiggle room? Consider looking at homes with lower price tags or work on upping your income and savings while you’re still renting.
If you’ll only live in a particular area for a year or two, renting is likely your best bet. “Having the option to get up and leave with minimal strings attached is very appealing,” Bull says. Renting can also be a smart way to test the waters, learning what you like and dislike about different neighborhoods.
When you’re ready to put down roots and plan to stay for at least five years, buying’s back on the table. Just make sure you thoroughly research the area first: If you have kids, are you happy with the school district? Is the neighborhood safe? Are the home prices increasing generally? You can find detailed information on crime rates and school rating on sites like City-Data.
If you can rent in your desired area for much cheaper than a mortgage and other housing costs would set you back, you may benefit from renting a while longer and saving or investing the difference in monthly expenses. Not only can this build your net worth in the meantime, but it allows you to test-run your budget. When you do buy one day, you’ll already know you can comfortably handle the uptick in expenses.