Bridge Loan or Home Equity LOC or Mortgage

[roob1]

Scenario: Own home outright (value about 400K). Looking to buy smaller unit (300K), but don't want to use any contingencies in the sale/purchase. What would be the most economical option to purchase smaller unit before sale of current property? Want to avoid using IRA also. Would need about 350K in any scenario.

Bridge loan
Home Equity LOC on current home
Mortgage (maybe pay off w/in a year)

Tried using online resources but am looking mainly for generalized answers....I know there are no right/wrong answers, but the more input the better. I know I can meet with a bank rep., but not sure how biased they would be.

[Dond1959]

I would do a HELOC as fees are less. The only issues could be the size of the loan and if you have sufficient income to support the loan amount. You could also try to get a zero cost mortgage where you get an above market interest rate to cover the closing costs. Since you will only be holding the loan for a year the above market interest rate will not be a concern.

[Neils]

Home equity loan would max out at about 80% depending on institution. This is based on appraisal value, not est market value.
Seems to me you would need more $$ to complete the transaction

[Kenswing]

Scenario: Own home outright (value about 400K). Looking to buy smaller unit (300K), but don't want to use any contingencies in the sale/purchase. What would be the most economical option to purchase smaller unit before sale of current property? Want to avoid using IRA also. Would need about 350K in any scenario.

Bridge loan
Home Equity LOC on current home
Mortgage (maybe pay off w/in a year)

Tried using online resources but am looking mainly for generalized answers....I know there are no right/wrong answers, but the more input the better. I know I can meet with a bank rep., but not sure how biased they would be.We're in the same boat as you are. Since we're not exactly sure what we're going to do when we move to The Villages we're just going to take out a mortgage. When our current home sells we'll decide whether to pay off the new house right away or wait awhile. With rates in the 2.5% range I might look at putting the proceeds from our house into something else. Then again I'm debt-phobic so we might just pay it off anyway - lol..

[JohnN]

HELOC does max out at 80% plus you have to pay the loan costs, appraisal fees, etc.

When in this situation, we used a bridge loan through Citizens First Bank. It all went smooth as silk and only had the very short term interest.

[Dean62]

Scenario: Own home outright (value about 400K). Looking to buy smaller unit (300K), but don't want to use any contingencies in the sale/purchase. What would be the most economical option to purchase smaller unit before sale of current property? Want to avoid using IRA also. Would need about 350K in any scenario.

Bridge loan
Home Equity LOC on current home
Mortgage (maybe pay off w/in a year)

Tried using online resources but am looking mainly for generalized answers....I know there are no right/wrong answers, but the more input the better. I know I can meet with a bank rep., but not sure how biased they would be.
We bought a house this year in a similar scenario as you. We were not going to put our house on the market for several months. We did a conventional mortgage and shopped based on fees and not interest rates since we knew we would pay off the mortgage as soon as our house sold. Once our house sold we paid off the mortgage.

[richs631]

Scenario: Own home outright (value about 400K). Looking to buy smaller unit (300K), but don't want to use any contingencies in the sale/purchase. What would be the most economical option to purchase smaller unit before sale of current property? Want to avoid using IRA also. Would need about 350K in any scenario.

Bridge loan
Home Equity LOC on current home
Mortgage (maybe pay off w/in a year)

Tried using online resources but am looking mainly for generalized answers....I know there are no right/wrong answers, but the more input the better. I know I can meet with a bank rep., but not sure how biased they would be.

A think a bridge loan would work best. No matter what you do it’s going to cost a few bucks

[Ginsanders]

If you speak with a finance banker, you will find out bridge loans do not exist anymore. After crunching numbers on costs, a first mortgage on the new home is always the best way to go and rates are usually less as well.

[Tomptomp]

I did the same thing. I was able to set up a line of credit, at absolutely no cost to me on my existing home. I didn’t touch the money until I found the house I wanted to purchase. My only expense was the interest on the money I used for the purchase of my new home. Once I sold my existing home I paid off the line of credit and incurred no expense thereafter.

[Pedrocarrasco01@yahoo.com]

I did the same thing. I was able to set up a line of credit, at absolutely no cost to me on my existing home. I didn’t touch the money until I found the house I wanted to purchase. My only expense was the interest on the money I used for the purchase of my new home. Once I sold my existing home I paid off the line of credit and incurred no expense thereafter.
Bridge loans are nonexistent, I got a line of credit from a bank until my home was sold, house sold quickly, I purchased my home in Paradise and my older home closed within 40 days, Paid the line of credit, it cost me a bit over $1000.00, easy peasy. This is the way to go (at least for me) you can borrow the money from your 401K and if you return the money within 90 days there are no penalties or taxes, however if you do not, the entire amount is tax due for that year, did not wanted to take a chance so I opted for the line of credit!! Good Luck and you will love it here.
:boom: :boom: :ho: :ho: :ho:

[NavyVet]

We have some experience with this. We are on our 3rd home here. All 3 purchases went to closing before we could close on the previous homes being sold. LOL
All 3 went through Citizens First. The second one we did a 15 year mortgage, the other 2 were bridge loans. They all worked out well and went smoothly. We literally took the proceeds check from the sales over to the bank and paid off the loans on the new homes. I think we paid one month's (2 at most) payment/interest. At the time, we compared fees and costs with loan officer to see which was the best option. Now I read on this thread that bridge loans no longer exist? Our last one was 3 years ago, so I'm not sure what all your options are. Best of luck!

[KRM0614]

Scenario: Own home outright (value about 400K). Looking to buy smaller unit (300K), but don't want to use any contingencies in the sale/purchase. What would be the most economical option to purchase smaller unit before sale of current property? Want to avoid using IRA also. Would need about 350K in any scenario.

Bridge loan
Home Equity LOC on current home
Mortgage (maybe pay off w/in a year)

Tried using online resources but am looking mainly for generalized answers....I know there are no right/wrong answers, but the more input the better. I know I can meet with a bank rep., but not sure how biased they would be.
You need to speak with a professional! Not a bank they only care about how much they can fleece you

Don’t trust anyone in this area - no one

Bankers are money clerks

[KRM0614]

We're in the same boat as you are. Since we're not exactly sure what we're going to do when we move to The Villages we're just going to take out a mortgage. When our current home sells we'll decide whether to pay off the new house right away or wait awhile. With rates in the 2.5% range I might look at putting the proceeds from our house into something else. Then again I'm debt-phobic so we might just pay it off anyway - lol..
If you check with credit unions and stay away from commercial banks the rate is 2.1-2.2%

Do a budget add a 20% surcharge at the end because your costs here are understated to get you to buy here ! I’m selling my house because it too expensive clicky and don’t golf and life far away from everything but close to the prison

[KRM0614]

HELOC does max out at 80% plus you have to pay the loan costs, appraisal fees, etc.

When in this situation, we used a bridge loan through Citizens First Bank. It all went smooth as silk and only had the very short term interest.
Stay away from citizens and join a credit union no extra fees better rates

[Kenswing]

If you check with credit unions and stay away from commercial banks the rate is 2.1-2.2%

Do a budget add a 20% surcharge at the end because your costs here are understated to get you to buy here ! I’m selling my house because it too expensive clicky and don’t golf and life far away from everything but close to the prison
I hope you are able to sell your house quickly.

[laboutj]

I hope you are able to sell your house quickly.

Life is too short for that much negativity

[dewilson58]

Life is too short for that much negativity
Not negative...............Just wishing 20 a quick sale. :coolsmiley:

[condomom22]

While Wells Fargo Home Mortgage and the other major mortgage banks no longer do bridge loans, Citizens First was still doing them as of 1-1/2 years ago. I imagine they would still offer it. Give them a call to discuss. It saved me from having to risk withdrawing from my IRA and then not getting the funds back in within 90 days.

[DAVES]

Scenario: Own home outright (value about 400K). Looking to buy smaller unit (300K), but don't want to use any contingencies in the sale/purchase. What would be the most economical option to purchase smaller unit before sale of current property? Want to avoid using IRA also. Would need about 350K in any scenario.

Bridge loan
Home Equity LOC on current home
Mortgage (maybe pay off w/in a year)

Tried using online resources but am looking mainly for generalized answers....I know there are no right/wrong answers, but the more input the better. I know I can meet with a bank rep., but not sure how biased they would be.

No one could answer this for you with the information you have provided. You mention a bridge loan. First of all depending on your finances you may not be able to get one.
In any case there will be closing costs involved. You may want to talk to a financial advisor, a broker etc. What you want to do is not that unusual and I'm sure there are many ways to do this.

I'm no financial expert but you mention your IRA. Depending on your situation age etc,
I think you can, possibly, borrow from your IRA use that money to buy the smaller home,
sell your too big home within a year and put the money back into your IRA. Assuming you are old enough to withdraw from your IRA you do not pay the 10% penalty but you do pay tax at your ordinary income tax rate. A shock to many. We put the money in free of tax. It grew free of tax. The taxman will take his cut when you take the money out.

Pressure? People cause there own pressure. If, you think prices on what you want to buy are going up so is the value of what you already own. Selling a place you say is worth 400,000 to buy one worth 300,000 you will not pocket 100,000. Out of that 100,000 is sales commissions, closing costs, moving expenses furniture that you may be tired of or just does not fit.