Bridge Loans | How to Buy and Sell at the Same Time - YouTube

Hi there! Emily Farber from Lepic-Kroeger, Realtors in Iowa City, Iowa.

welcome to "Lunch With A Lender." I'm here with Eric Baumgarth from the

University of Iowa Community Credit Union, and we are not only eating french

fries and burgers, but we're talking about bridge loans.

Emily: Today I am meeting with a lender, Eric Baumgarth of the University of Iowa

Community Credit Union, and we are going to discuss the elusive bridge loan. Hey, Eric!

Eric: Hey, Emily.

Emily: Let's talk about bridge loans. Can you explain why a buyer might

want to use a bridge loan in today's market? Eric: Absolutely. Let's say you've got

your existing home, and you've got equity built up in your existing home, and you

need to use that as the down payment on the new property. That's where a bridge

loan comes into play. We're going to use like a short-term home equity product to

kind of pull out that equity on your existing property and use that as down

payment before you have it sold. Emily: That's vital in today's market because when

you're in a strong seller's market, homes are selling so quickly that a seller may

not be interested in your offer if it is contingent upon you selling your house.

So, Eric, who might qualify for a bridge loan? Eric: Good question. What we look at is,

technically speaking, a few months after you purchased the new home you're going

to end up with two house payments as a worst-case scenario.

Well that's next question...anyway. So, what we have to look at is we have to look at

your overall debt ratios-- your income to your monthly debts-- and we have to

support that with both house payments into the equation. So essentially we're

just gonna look at it with both house payments as a worst case scenario, and if

you're if you still qualify, then we would love to help out with the bridge

loan. Emily: So, we just touched on it briefly, but what are some of the risks and what

are some of the benefits of the bridge loan? Eric: So, on one hand a bridge loan can be

pretty simple. If you already have an accepted offer on your current home then

we can see when the finish line is going to kick into play. So, you may not end up

with actually having to house payments. If you don't have an accepted offer by

the time we closed on the new home, your first payment on that new property is

going to be that second month away.

So if you haven't sold your existing property by that time you're gonna end

up with two house payments. Emily: Nobody wants that to happen, and that's why you need

to hire a real estate agent who's going to work hard for you and have your home

priced realistically in order to get it sold. So, can you tell us what is the cost

of getting a bridge loan? Eric: Great question. So, we work with our retail partners here

at the University of Iowa Community Credit Union to do that bridge loan or a

home equity loan and they just need to do a lien search and record that

mortgage. So, essentially your costs are going to be $300 or

less, typically, and then from there you're only gonna pay interest on that

bridge loan until it's paid off. So, it could be 30 days of interest, could be 60

or 90 days, it just depends on how long that bridge loan lasts. Emily: What do those

interest rates look like? Eric: Right now it's pretty much tied to our home equity

interest rates so those are going to be monthly promotions that are set out so

anywhere from low 4.0s% on an interest-only basis, or we can actually

stretch that bridge loan payment over 30 years if you'd like. That rates gonna be

a little bit higher. Emily: All right. Thanks, Eric! If you have any more

questions about bridge loans I'm sure Eric at the University of Iowa Community Credit Union

would be HAPPY to tell you more about it, and we just want to thank

you for joining us today! As always, I put out videos every Friday, if not more

often. If you haven't done so please subscribe to my channel and hit that

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every time I put out an awesome new video. All right, catch you next time!

Eric: Thank you!