Buying or Selling a home is often the largest transaction of our lives and yet with the infrequency of these transactions, it is very stressful period of time for many people. It is extremely important that a client hire a lawyer they have confidence in and that they receive the proper advice on closing.
When buying and selling a home at the same time, clients should consider closing the purchase of the new home first and the current home 1-2 weeks later. In this situation, the mortgage company will provide a “bridge loan” in the amount of the purchase down payment. This bridge loan is paid back from the sale proceeds on the closing date of the sale.
In my experience, many clients are surprised at how inexpensive a bridge loan is. By way of example, if you are purchasing a home for $375,000 with a down payment of $75,000 and a mortgage of $300,000, the mortgage company will provide a “Bridge loan” of $75,000 to allow the buyer to purchase the home and pay back the bridge loan 2 weeks after the purchase. A bridge loan of $75,000 will carry interest of approximately $14 per day.
A bridge period eliminates a great deal of stress from buying and selling on the same day. By purchasing the home first, the buyer has a chance to paint or complete other renos before moving. It also eliminates stress on the closing date if there are delays on the day of closing because the buyer is not ‘moving’ that same day. There are no extra legal fees or other costs for a bridge loan save and except the daily interest due to the mortgage company.
Please feel free to contact me with any questions you may have about your real estate needs.
Mike Miller
Matlow, Miller, Cummins, Thrasher
Office: 519-621-2430 E-Mail: miller@matlowmiller.com Fax: 519-621-0072