Promoting your outdated house whereas shopping for a brand new one in Seattle is usually a difficult balancing act, particularly concerning timing and funds. This may be much more tough in a market the place stock is scarce and residential costs are rising. For a lot of owners, it would appear to be their solely possibility is to promote their present house, transfer out, and quickly relocate whereas home looking. However what if there was a greater approach?
Enter the bridge mortgage — a short-term financing possibility that allows you to buy your house earlier than you’ve offered your outdated one. This publish will information you thru the ins and outs of bridge loans – the professionals, the cons, when you must take into account one, and what you may count on all through the method.
DISCLAIMER: As a pleasant reminder, this publish is meant for instructional functions, not monetary recommendation. In the event you want help navigating using a bridge mortgage in Seattle, HomeLight encourages you to achieve out to your personal advisor.
What’s a bridge mortgage, in easy phrases?
A bridge mortgage, generally known as a swing or bridging mortgage, is a short-term mortgage that leverages the fairness in your present house, offering you with the funds wanted for a down cost and shutting prices in your new dream house.
This lets you buy a brand new property with out the stress of promoting your present house first. Whereas bridge loans are usually dearer than a standard mortgage, pace and ease of use are sometimes price the additional expense.
How does a bridge mortgage work in Seattle?
Think about you’ve discovered the proper new house in Seattle, however your present home hasn’t offered but. Right here’s the place a bridge mortgage makes probably the most sense. It really works by utilizing the fairness out of your present house to cowl the down cost and closing prices in your new property, making certain you don’t miss out in your dream house on account of timing points.
The lender dealing with your mortgage for the brand new house will typically handle your bridge mortgage. They normally require that your present house be actively listed on the market and provide the bridge mortgage for a interval starting from six months to a 12 months.
Some of the essential issues your lender will take into account is your debt-to-income ratio (DTI). Lenders will calculate this by contemplating the funds of your present mortgage, the mortgage in your new house, together with any interest-only funds on the bridge mortgage. The lender desires to make sure that you’re financially steady sufficient to hold two mortgage funds, alongside along with your bridge mortgage funds.
Nevertheless, there’s some flexibility. In case your present house is underneath contract and the customer’s mortgage is accredited, lenders would possibly solely embrace the mortgage cost in your new house within the DTI calculation. That is so you aren’t doubtlessly overburdened ought to your outdated house take longer to promote.
What are the advantages of a bridge mortgage in Seattle?
Bridge loans provide a number of benefits, making them an interesting possibility for homebuyers transitioning between properties. Listed below are the principle advantages:
