Question:

What is a residential bridge loan?

Answer:

A residential bridge loan allows you to sell your house after you relocate to a new one. Although having a second mortgage may be used much the same way, closing costs are too high, and even that rates on residential bridge loans may be a lot higher, if the house is sold within a year and the bridge loan is repaid, a second mortgage does not stand a chance.

A residential bridge loan will let you move to your new home and have time to recarpet and repaint your old one. Then, when it is sold, the residential bridge loan is repaid, and even the prepaid interest will be returned to the buyer. A problem arises if your current property does not get sold before the term of the bridge loan is up. The residential bridge loan may be extended, but you will have to be making two mortgage payments at once.

Using a residential bridge loan is not recommended in areas where the residential real estate market is slow.

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