Wife and I were planning on listing/selling our home at the end of the year or early next year. Then going month to month in an apartment while looking for the right house in the right location. As luck would have it, a home with good bones, great yard and the right location came on the market but it is at the wrong price. Likely more than $100k too high as it needs a full remodel inside. If the price comes down I think I'd like to move on it.

I'd expect it to need at least $150k and 3 to 6 months to make it "our" house.

We lived in a full remodel 5 years ago and I have no desire to live through/in that again.

So I asked Grok for a solution and he came up with a bridge loan. Am I crazy for considering it? Are there other options out there?

I feel pretty good that our house would sell reasonably fast and we'd have over $300k in equity after closing. Plan would be to put $200k into the down payment and the rest into the reno plus some from our cash reserves.

The goal is to avoid living in the reno. Current mortgage plus interest only bridge would be no problem and we have cash on hand to cover both for well over least 12 months which is what Grok told me I need to qualify.

All logic says low risk but I'm not wired that way and I'm pretty sure I wouldn't sleep until our current home sold. Has anyone done this or is there a product I'm not thinking of?

Not crazy at all. We had one lined up a few years ago but then the owners of the house we were trying to buy backed out. Pretty sure that just got a better offer.

Already had the bridge loan set up with a mortgage broker. Interest rate is a little higher than the regular mortgage rate but worth it to us to avoid a big hassle and the cost of storing our furniture and that "other stuff" we have.

Most experienced mortgage brokers can get this done for you.

Where do you live or plan to move to?

Message sent

No dog in the hunt. HELOC has no closing costs, rates about what mortgage rates are and you might even find a 6-12 month promo rate. Interest only payments. If you look at this option do it before you list the house.

We have a bridge/Buy before you sell that would possiblly fit your scenraio. It solves both down payment and possible debt to income issues that a lot of buyers do not anticipate. We have done this for a number of Texags posters over the years.

It can make deals work that otherwise would not with a HELOC for example, as a HELOC makes a debt to income higher not soliving the debt to income most folks have.

My email is my screen name here, and here is more on the program: https://ribbonhome.com/

I'm just trying to educate myself. Is this bridge loan amortizing? A HELOC is interest only for 10 years so it adds very little to DTI. It can even pay off the first mortgage greatly reducing DTI.

We actually did a cash out refi back in 2019 with Hurst. I just went back and looked at my emails and Jay, you and I started that conversation and then it was finished by Corey. Good experience and we will give your team a shot IF we go forward. 2 Hurst employees have DM'd me plus you, so who do I reach out to?

Regarding the HELOC option, I think that might have been best but the cash out in 2019 kills that.

We are going to meet with a realtor next week to sanity check my value of our home and ability to resell and more importantly sanity check my value of the house in question. I believe they are priced at least 20% too high so when will they figure that out? I would never buy it at the price they are asking. The inside of the house is almost untouched since 1987!

We are also going to walk the house with a designer to see if the renovation we want to do is physically possible and in our budget. Lots of balls in the air right now.

Not a gambler and never have been and something like this is way outside my wheelhouse risk wise - but, the outdoor space on this one might get me off center. We shall see

A HELOC can pay off a cash out refi that was done more than 1 year ago. I've seen people do that to create cash and reduce debt to income in the past.

Lets say your DTI with your current mortgage plus all debts is 30 today and now you want to buy a new home before selling your new house so you have to add that new mortgage to your DTI so lets say with the new PITI your DTI is 60%. That 60% is now too high to qualify for the new mortgage. so, you either have to sell your current house first or make a contigent offer to get your DTI back to 30% to qualify for a conventional loan.

Taking out a HELOC only adds debt. If you borrow 200k against your current house at prime that would be a 1125 a month payment you have to add to your current DTI. So, even if you are saving a few bucks putting more down on financing the new house the new HELOC payment more or less offsets, so your DTI is more or less still 60%. You still can not get a conventional loan with a 60% DTI.

And our particular brige loan is NOT amortizing. But, the key to our buy before you sell program is that we do not care that your DTI is 60% and will finance up to 95% in Texas (up to 100% potentially in other states).

Love repeat business! and reach to the the guys who reached out to you. I will always be available as well. We always look at all the options before we go to the bridge loan but we do have it if it is what is needed.

We did a Bridge Loan with Jay last fall. Fairly painless. It adds some cost to your two transactions, but - in our case - it allowed us to get in a house we wanted while we sold our home. It was a job move to new location so it made sense for us.
We were fortunate and bought and sold about 6 weeks apart so we only had to make one of the Interest Only Bridge Loan payments.
For us, the extra cost was worth it.

Ol army 92 said:

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Wife and I were planning on listing/selling our home at the end of the year or early next year. Then going month to month in an apartment while looking for the right house in the right location. As luck would have it, a home with good bones, great yard and the right location came on the market but it is at the wrong price. Likely more than $100k too high as it needs a full remodel inside. If the price comes down I think I'd like to move on it.

I'd expect it to need at least $150k and 3 to 6 months to make it "our" house.

We lived in a full remodel 5 years ago and I have no desire to live through/in that again.

So I asked Grok for a solution and he came up with a bridge loan. Am I crazy for considering it? Are there other options out there?

I feel pretty good that our house would sell reasonably fast and we'd have over $300k in equity after closing. Plan would be to put $200k into the down payment and the rest into the reno plus some from our cash reserves.

The goal is to avoid living in the reno. Current mortgage plus interest only bridge would be no problem and we have cash on hand to cover both for well over least 12 months which is what Grok told me I need to qualify.

All logic says low risk but I'm not wired that way and I'm pretty sure I wouldn't sleep until our current home sold. Has anyone done this or is there a product I'm not thinking of?

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Currently doing this exact thing through Jay. Doing a complete gut job on the new house with a bridge loan while selling our current house. Higher interest expense while you have the bridge loan but we through that into the remodel cost of business. Only thing I would recommend is double your reno budget. Construction and materials are ridiculous.