In the event you’re prepared to purchase a brand new dwelling in South Carolina however nonetheless have to promote your present one, it may be difficult to determine the right timing. Coordinating the sale of your present dwelling and buying a brand new one is much more troublesome when competitors is fierce and costs are excessive. You may assume your solely possibility is to promote, discover short-term housing, and hope your subsequent dwelling turns into obtainable quickly.
A bridge mortgage may supply a greater answer. With short-term financing, a bridge mortgage helps you safe your new dwelling whereas supplying you with the time to promote your current one—making it simpler to maneuver ahead with out the juggling act.
DISCLAIMER: As a pleasant reminder, this put up is meant for academic functions, not monetary recommendation. In the event you want help navigating the usage of a bridge mortgage in South Carolina, HomeLight encourages you to succeed in out to your personal advisor.
What’s a bridge mortgage, in easy phrases?
A bridge mortgage, typically known as a swing mortgage or hole financing, is a short-term mortgage designed that will help you purchase a brand new dwelling when you’re nonetheless engaged on promoting your present one. This kind of mortgage leverages the fairness in your current property, supplying you with the money you want for a down fee and shutting prices in your subsequent dwelling.
Whereas bridge loans are inclined to have increased charges than conventional mortgages, they provide a handy and fast answer for householders who want flexibility to make a easy transition.
How does a bridge mortgage work in South Carolina?
A typical state of affairs the place a South Carolina purchaser may want a bridge mortgage is once they discover the fitting new dwelling earlier than their present one has bought. On this case, you should use the fairness out of your current dwelling to cowl the down fee and closing prices in your new buy.
Often, the lender dealing with your new mortgage also can present a bridge mortgage, usually with phrases lasting six months to at least one yr. As a part of the approval course of, they could calculate your debt-to-income ratio (DTI), together with funds on each your present and new mortgages and any curiosity on the bridge mortgage, if relevant.
In some instances, in case your current house is already underneath contract and the client’s mortgage is authorized, the lender may solely rely the brand new mortgage in your DTI.
What are the advantages of a bridge mortgage in South Carolina?
Utilizing a bridge mortgage has a number of advantages, together with permitting you to purchase your new dwelling whereas easily managing the transition.
- You may make a non-contingent supply in your new dwelling
- You solely have to maneuver as soon as
- You’ll be able to put together your previous dwelling on the market after shifting out
- You’ll be able to full staging with out the stress of residing within the dwelling
- You’ll be able to act shortly on a brand new dwelling with out ready to promote your present one
What are the drawbacks of a bridge mortgage?
Whereas a bridge mortgage can present flexibility, it additionally comes with just a few potential drawbacks which might be vital to think about.
- Further prices, together with underwriting and origination charges
- Increased rates of interest than a standard mortgage
- The added monetary pressure of paying as much as two mortgages and a bridge mortgage
- Could also be more durable to qualify for than a standard mortgage
- Underwriting can typically take longer than anticipated
Lenders will evaluation each your earnings and the fairness in your present dwelling to find out how a lot you possibly can borrow. Qualifying could also be difficult for those who owe greater than 80% of your house’s worth.
When is a bridge mortgage a very good answer?
A bridge mortgage isn’t the fitting match for each scenario, however in some instances, it may make the buy-sell transition smoother.
Some eventualities the place a bridge mortgage could be a useful answer embrace:
- You want the fairness out of your present dwelling for a down fee in your new dwelling.
- You need to keep away from a double transfer and interim housing by bridging the sale and buy timelines.
- Your dream dwelling simply grew to become obtainable, and also you’re desirous to act shortly with out delays.
- Your supply’s dwelling sale contingency has been a deal-breaker, and also you want speedy buying energy.
- You’re unable to organize or stage your present dwelling on the market whereas nonetheless residing in it, and promoting a vacant or staged dwelling could also be extra interesting and handy.
