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Originally Posted by Tracybrian
I need to know about Bridge loans. Is there a way to get one for folks who have a credit score lower then 620?
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Basically, a bridge loan enables one to purchase a new home while paying little or no money towards their current home, ideally until it sells. Bridge loans can be structured to completely pay off the old home's mortgage or simply to add the financial obligation of the new home to your current debt.
Typically, you must obtain the bridge loan from the lender you use to finance your new home. Usually, the loan is structured with a short term (often one year or less) and a substantial amount of prepaid interest.
In most cases, a bridge loan is used to pay off the existing mortgage, with the remainder (minus closing costs and prepaid interest) going toward the down payment on the new home. If after six months the old home has not sold, the borrower begins making interest-only payments on the loan. When the home sells, the bridge loan is paid off. If it sells within the first six months, any unearned interest payments will be credited to you.
As far as obtaining one with a score of less than 620, it depends on the amount of equity you have in your current home.
However, even if a 620 borrower had a large amount of equity, it would still be extraordinarily difficult, if not impossible, to obtain a bridge loan for that borrower.
Hope this helps!