Today's Bridge Loan vs. Yesterday's

What is a bridge loan and why do you need one? A bridge loan is a vehicle used to purchase a new home when you have a home you need to sell. This loan will bridge a percentage of the equity in your current home to be used as a down payment on the new home.

Why should you do a bridge loan? The easiest way to understand this is to turn the tables and look at the situation as if you are the seller. You're selling a home and a prospective buyer would like to buy your home. They proceed to make an offer with a house sale contingency. This means you are taking your home off the market and allowing them to sell their house. How quickly you can move and buy something new is in the hands of your buyer. In my opinion this is a problem for two reasons. First, what if their house is the pink elephant of the neighborhood? And second, what if their home is over priced? The solution is a First Place Bank Bridge Loan.

Ten or fifteen years ago if you told a prospective buyer that they needed a bridge loan they typically broke out in a cold sweat and for good reason. The bridge loan of yesterday was very difficult, expensive and not by any means user friendly.

With yesterday's bridge loan you had to pay two full sets of closing costs, approximately $2,000 on the new home and $2,000 on the bridge loan. When the purchase transaction was completed you had to make your old house payment, the bridge loan payment and your new house payment. Here's the kicker, you needed to qualify with all the payments! I think most would agree the word difficult is no exaggeration.

First Place Bank's bridge loan of today has changed dramatically. Today's bridge loan is designed to make the transition from your old home to the new home an almost seamless transaction. We have taken years of data and information from clients and created the most user-friendly bridge loan around.

First we make it affordable - a flat fee of $500. This fee itemized out is typically $250 for the appraisal and $250 for the title exam and filing of the bridge loan mortgage. Second, we focused on the monthly affordability. With the First Place Bank bridge loan we payoff your old mortgage and you have the ability to defer the interest on the bridge loan for up to nine months. This leaves you with making only the mortgage payment on the new home. A secondary benefit of a First Place Bank bridge loan is you will have a much easier time qualifying for your new home since we paid off the old mortgage.

Let's summarize the benefits of a First Place Bank bridge loan:

• No dual closing costs
• You will not make triple mortgage payments
• You have the ability to defer the interest for up to nine months
• Qualify on only the new house payment

It is true - knowledge is power. Now when you come across your dream home you will confidently be able to make an offer without any type of house sale contingency.