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the proven resource for selling, financing, maintaining and improving your home
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Free FSBO Guide
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the best
For Sale By Owner book
The best-selling guide book
for all sellers. FSBOComplete™ is organized into 8 Simple Proven Steps, guaranteed to help you sell your house.
FSBOComplete™ gives sellers knowledge and control of the whole
selling process + the know-how that puts sellers on equal footing with realtors.
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FSBOComplete™ eBooks.
By reading and following FSBOComplete™ proven guides, you, the For Sale By Owner
seller, will find the answers to your questions and:
- Sell your house for the most money, in the shortest time, with the least aggravation
- Get the know how that will put you, the For Sale By Owner seller, ahead of your competition, like how to:
- Maximize your profit by setting the right price
- Handle inspection issues
- List your house on the Internet for FREE
- Gain knowledge and control of the whole selling process
- Learn to negotiate like the top agents
- and much, much more
Home Equity Line of Credit
© 2007 Complete Books Publishing, Inc.
Summary: Bridging loans or gap loans are loans used to bridge the gap between two transactions. Duh! Pretty simple, eh?
Unfortunately not. One of the possible pitfalls can be the balloon note at the end.
Bridging loans or gap loans are loans used to bridge the gap between two transactions. Duh! Pretty simple, eh?
Unfortunately not.
First of all, sellers would not be in a position to need bridging loans if everything they were planning had gone as they had wished.
Second, bridging loans cost money, in the form of additional interest over and above that of a longer term loan and the balloon note of repayment sitting out there at the end of the loan.
Caution dictates that a seller should wait until his/her current home sells before buying another house. However, whether due to relocation, change in family or job-related circumstances, or simply a slowing market for home sales, people sometimes find themselves with two houses. These are typical situations where sellers will need bridging loans. Bridging loans enable a seller to borrow against the equity in his/her current home until it sells.
Bridging loans usually include a balloon note that has to be repaid at the end of loan period. This can be disastrous if the home used for equity does not sell or does not sell for as much as necessary. However, if that home sells fairly quickly or for the expected amount of money, the bridging loans can be rolled into the new home mortgages in order to satisfy the balloon repayments of the bridging loans.
Obviously, if the house you are selling has good contract on it to a seller who has a locked in mortgage from a solid mortgage company, then a bridging loan can be a lifesaver. However, with the failure of a number of so-called front-line mortgage companies, it is hard to justify the use of a bridging loan. In good times, people have used leverage to achieve great financial gains. Remember, however, leverage works both ways and so do bridging loans. In other words, instead of staving off the inevitable, bridging loans can accelerate it.
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