Taking a Swing On Bridge Florida Home Loans
We often talk about the distinction between sellers and buyers. The former, of course, are trying to turn a profit on their property, while the latter are hoping for Florida mortgage loan approval in order to afford their dream house.
Sometimes, however, the two are one and the same. What if, for example, you’re trying to sell your old home while buying a new one? Consider a bridge loan for such a purpose.
What is a bridge Florida home loan?
A bridge loan, also known as a “swing loan,” is a short-term Florida mortgage that’s very similar to a Florida home equity loan. How come? Because you use the equity in your current home to put a down payment on the new home … while you try to sell the old one. Follow all that?
Typically, you receive a bridge loan for six months. Ideally, when the old house is sold, the proceeds pay off this resource and the Florida home mortgage from the old house; so that all you’re left with is the mortgage on the new house. However, the difference between a bridge loan and a home equity loan is that a bridge loan is used specifically to “bridge” the time period between selling the old house and closing on the new one.
If you don’t have a contract of sale on your initial property, you could still quality for a home equity line of credit, which is a second loan on your current house. You can use it to finance big ticket purchases like buying a new home, as in this case.
New kind of Florida home mortgage loan
However, a different type of loan is emerging that could help people in this situation. It’s a type of interest-only Florida home loan that includes a seller contribution. Here’s how it works:
- The seller of the home you’re buying contributes money from the proceeds of the sale of his house toward the deal. However, instead of contributing money toward closing costs or purchasing points, the seller agrees to pay up to six months of the your Florida mortgage interest. Because it’s an interest-only loan, you are only responsible for paying the property taxes and insurance.
The benefit to the seller is that he sells his home faster. But it’s even better for you, the buyer. why? Because this gives you time to sell your old house without making principal AND interest payments on two mortgages. Even if you don’t sell your home in six months, your interest-only payment will still be lower because you aren’t paying principal.
