Has anyone done a Bridge Loan?

[Mishetta]

We have been actively searching for a new home but we still haven't put our home up for sale. If we want to build a new home, no builder will do a "contingency" anymore. They all say we have to do a Bridge Loan.

Today, a house that was built for someone else, became available because they didn't qualify for the loan, so our Realtor called us to let us know about it. We had seen that particular house once before & we loved it. It fit our needs & our dreams.

In talking with the Realtor, she told me that the builder will NOT do another contingency again on the house (he had done that with the previous family & their home never sold & they did not qualify for a Bridge Loan.)

She told us that the only way we could get into that house is to apply for a Bridge Loan & then we just have to wait & see when our house sold, but basically it would be 2 house payments. The builder would bend & give us a 72 hour contingency plan. (Like we could sell our house in 72 hours!)

Have you ever gotten a Bridge Loan? Have you heard anything positive or negative about that type of loan?

Just curious....

 

[jel0511]

See, now I'm suprised about that. I used to work in the mortgage business and I always thought a bridge loan was given to a homeowner to: "Bridge the gap between the purchase and completion of the sale of current home". Since the other family didn't have a signed contract on their house, I can understand why they didn't get a bridge loan. There aren't used for that purpose. Say, you had a contract to sell you house on 7/1/03, and you wanted to move into the new house on 6/1/03. You would need money to cover the gap between your new mortgage and any downpayment monies you needed from the close of your new home. The bridge loan ONLY covers those monies. If you wanted this home, you'd have to take out a COMPLETELY new mortgage, knowing you'd need a downpayment to get that, and get approved for the additional payment. They probably could stretch the debt/income ratios, but probably not more than 35% house payments, 40% total debt. After selling you current home, you could then refinance the new home, with any additional down payments monies you'd want to apply. One thing I learned, by my own expereince with realtors and builders, they are woefully inept on understanding the mortgage product out there. I'd call a mortgage lender to see if there is a priduct for you to utilize. But I'm guessing that your only hope will be getting a signed contract on your house so you can get a true bridge loan. I hope that made sense. If not, please ask any additional questions.

 

[amid chaos]

When we did this 9 years ago, they said they weren't doing bridge loans anymore. So we had to go thru the whole loan process, borrow the money for our house and then repay it 5 days later when we closed on the old house....5 days!!!!!!

 

[Mishetta]

Ohhh.....I'm not so sure I like the definition of a "Bridge Loan" after all. Sounds pretty scary to me, especially since we haven't even put our house up for sale yet! Guess what, all our money is tied up in our current home so......looks like that dream was just shot down!

Thanks for sharing. This certainly would be something we wouldn't be interested in.

 

[Jeafl]

We had one 8 years ago when the new house we were building was finished and we hadn't yet sold our old one.

For us, it worked out fine, because it turned out to be for only 3 months. The scary part was not knowing how long we would be making 2 mortgage payments. It definitely is a gamble though.

 

[jel0511]

I'm sorry, this won't work out for you. I was in a similiar situation 4 years ago, when we decided to build our current home. All our equity was in our condo. We weren't afraid of being stuck with two homes, since we lived in a hot town, but we needed the money to buy the new house. Our builder also wouldn't build with the contingency of selling our home, and they also wouldn't start building until we had a mortgage commitment (it seems more and more builders are doing that). To be able to get the mortgage commitment, we needed to sell our house. It was a BIG mess!! Anyway, we sold our condo ourselves in 24hours, luckily, and got our mortgage commitment. We had to move into an apartment for 5 months while our house was being built, but we only had DD at the time and she wasn't even 1 yet. Good luck on your house search!!! I'd find out about the mortgage commitment angle if you're looking into building your next home.

 

[elgerber]

We have had a couple of borrowers who were in a situation like yours. In both cases, the houses did sell in time, so they didn't need the bridge loan. They were going to take one out, in case the house didn't sell in time, to cover the down payment on the new home. They did have to qualify with all 3 payments, 1st mtg, new mtg and the bridge loan payment. The scariest part is if your house does not sell, you are still responsible for all of those payments until it does.

Erika

 

[Mishetta]

You are right! That is a very scary thought! I don't think we could sleep at night knowing that we'd have all those payments to make. The thing is that, that new home has been on the market for nearly a year. It was built for someone but then they didn't qualify so they lost the new house (before moving in), then 2 other families put a deposit down (not at the same time of course ~ I just mean to say that it's happened TWICE to this builder) & they did a "contingency" contract but it didn't work out for either party. Neither of those 2 families have sold their homes yet. Soooooo.......Now the Builder said "that's it. Next person that wants this house & still has one to sell, will have to look into a Bridge loan. No more "contingencies." So I guess that leaves us out!

Thank you all so much for your responses.