Buy Before You Rent
One of the uses of a residential bridge loan is to bridge the gap between the purchase of a new home and renting the departing residence. Historically, the issue has been that the homeowner must have a signed lease and proof of lease deposit before the rental income can be used for qualification. This makes it tough for a lot of people to qualify because you have to count BOTH mortgages into the debt-to-income ratio for a conventional mortgage, without the benefit of the rental income. The reality is that number is difficult to reach for most people. That’s why Hurst Lending designed the residential bridge loan program, which allows you to buy without having to sell your departing residence first.
Borrowers can use Hurst’s Dominate with Cash product to purchase their new house, which buys them time for the buyer to move into the new house, clean up the old house and then put it up for rent. This allows the buyer to qualify with a higher than typical debt to income ratio because they do not have to show a lease before purchasing. This gives the buyers the ability to buy a new house, all the while keeping their current house with a record low mortgage rate. Buyers can even earn income from their property.
Move Down Buyer
A classic use of Hurst Lending’s residential bridge loan is when retired borrowers have a large amount of equity in their current residence, but not a lot of verifiable income elsewhere. These borrowers often also have a large amount of assets in retirement accounts. They have a few options, and none of them are very appealing. The first option is to sell their current house BEFORE buying a new home. This option necessitates intricate timing of the transactions, which can be of course stressful, but also the potential of moving twice, or even having to sell the house for less than market value.. All of those scenarios cost money.
The other option is to liquidate retirement savings in the stock market in a lump sum, which means either paying large capital gains taxes, or locking in recent losses, both options which can cost six figures, depending on the size of the house.
Hurst Lending’s residential bridge loan options eliminate the need for either of those costly options. We will lend up to 95% on the new home, with no prepayment penalty. So, as soon as the departing residence sells, you can simply pay off the residential bridge loan and you are done, with all other assets still in place. Simple, fast and the best financial option. To learn more, reach out to Hurst Lending today.