Tuesday, June 20, 2006
Contingency vs Bridge Loan
I believe the most important link in the Real Estate chain of events is the Mortgage Commitment. I also know that while "Price" may seem like the biggest hurdle to deal with, especially with First and Second time Buyers, its really "Monthly Payment." And this is never more evident than when the deal depends on the sale of an existing property.
From a Listing Agent point of view, offers that come in with Riders 4A or 4B,("Home Sale" and "Home Close" Contingencies respectfully) are in most cases instant, if not automatic, deal breakers. Unless the new property is New Construction 3-4 months+ from the delivery, its just too risky for the Seller. Enter the Mortgage Contact. Many deals in my career have been held together with the invaluable help of a great money man. View my mortgage guru here.
A Bridge Loan is a reasonable alternative to a Home Sale/Close Contingency. And when discussed early on in the process, the Buyers know exactly what monthly commitment they're looking at should their existing property not sell before the new property closes. Most listing agents will not hesitate at all to proceed in negotiations if they are sure a Bridge Loan has been structured before the offer is submitted. But don't just take my word for it. Go to my Mortgage Guru link and see what he has to say.
Chicago Home Estates