Bridge Loans: Good, bad, ugly?
My husband and I are trying to sell our house. ItÂs been on the market since April 1, listed with a realtor well known in our town for selling houses in our price range. WeÂve had lots of showings and a couple open houses. WeÂve had a few people return for second showings. We got one offer after only three weeks, but the buyer backed out. We dropped our price this week and are prepared to drop it again in a week or two if we get no bites.
We have an accepted offer on a new house that is contingent upon us selling ours and closing on the new house by June 29. WeÂve already completed the whole house and radon inspections on the new house (cost us $400), and the sellers are fixing or have fixed the items we requested be fixed from the inspection. The sellers have a kick-out clause; weÂd have 72 hours to remove our contingencies if they got another offer. Our only contingency at this point is selling our house first. We are fully approved for a loan.
We have looked into getting a bridge loanÂand have been approved for oneÂif our house doesnÂt sell by June 29 or if the sellers enforce the kick-out clause. Their house has been on the market since January. They have bought a condo and moved out, so the house is empty and available for immediate possession.
WeÂve wrestled with the idea of the bridge loan. On one hand, we already have some money and emotion invested in the new house. It fits our needs perfectlyÂthe size, the layout, the location, etc. We saw 20 houses before seeing this one and knew this was the one for us the moment we saw it. (And, yes, I know there is more than one "right" house, but itÂs like this one was built just for us.) We can afford the interest-only payment as it will be very close to the amount of our escrow payment on the new house. We can swing the double utilities for a while, and weÂre OK with taking care of two houses at the same time (both houses are in the same town, just a few miles apart).
On the other hand, weÂre really concerned about the strain of owning two houses would put on our finances and marriage over the long haul. The housing market in our area is very slow. Houses are sitting a very long timeÂ-some as long as two years! We donÂt see our house sitting for very long since itÂs in a good first-time buyer price range (under $90k), but since none of us have a crystal ball, itÂs hard to say when itÂll sell.
So IÂm looking for adviceÂ-from the people whoÂve been in our situation or currently are. If you got a bridge loan, tell me why and how it went and if would you recommend it. If you didnÂt get a bridge loan, why not?
Thanks in advance.