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Page 9


The Mortgage Coach


F


all has arrived and winter is peeping around the corner. Te grapes have been


harvested and the trees be- gin carpeting our landscapes, and, of course, clogging our gutters! Our love of


this


cycle, binds us together in appreciation of the beauty of Sonoma County. Home own- ership also binds our communi- ties. It is a foundation for families, and a base to accumu- late wealth. Te move-up homebuyer has equity sitting in their home, but needs to sell the home, so equity can be tapped. When the housing market is shiſting from a sell- er’s market to a buyer’s market, an offer that has contingencies might not seem so appealing. Tis is when we need a bridge to get us to the next home. Bridge loans have been around for as long as I can remember. When they are used depends on the market and what your


Bridging the Gap! by Barry O'Meara of Santa Rosa, CA • barryo@stearns.com


equity position is. Tese aren’t cheap loans but if you need to secure that next purchase without the contingency and anxiety, this could be your solution. Tese loans have a few re- quirements such as equity and the ability to repay. Tey are for tempo- rary financ- ing to get you from point “A” to point “B”. Tey are not cheap but they have their niche and


serve a


purpose. Te equity needed will be


70% of the combined total of the purchase price of the home you’re buying, plus the value of the home you will be selling, subtracting the amount of any mortgage you owe.


So, your


net equity from your depart- ing home must be enough to give you 30% equity between the two properties. For exam- ple, say the home you are sell- ing will go for $600,000 and you owe $210,000. Te home you want to purchase costs $700,000. In this scenario,


the buyer has $390,000 in eq- uity so the combined value of $600,000 and $700,000 will be $1,300,000 and the loan-to- value would be 70% ($390,000 – equity, divided by $1,300,000 – combined values). Te Bridge Loan pays the full price of the home being purchased. Te Bridge Loan holds a sec- ondary lien on the home be- ing sold, and a full lien on the property being purchased. Te ability to-pay is based on the loan amount you are ap- proved for on the purchase. Once the sale of your depart- ing residence is completed, you will pay down the Bridge Loan and secure permanent financing. Tese loans are expensive be- cause you are paying an orig- ination fee of 2.0% to 2.5% points. Te interest rate is 8.95%, interest-only pay- ments. Te term is usually six to eleven months. Tis is pri- vate money and not subject to the Qualified Mortgage (QM) rules. Tere is no pre-pay- ment penalty. Tey offer quick closes, with an average 21-day turnaround time. Tis loan is for someone that is looking to make an offer that is like cash, with no con- tingencies for selling their de- parting residence. Tis gives


the buyer better leverage to negotiate the price, and offers a quicker close. Te buyer has the opportunity to get the best sale price on their home, and to move once, instead of sell- ing their home and having to either rent it back, or make a temporary move. More free- dom while you shop for the home of your dreams!


Tese loans are not for every- one, but if you feel at a dis- advantage because your con- tingency offers are not being considered seriously, or you keep getting beat out by “all cash” offers, this could be the “Bridge” to your new home.


Weird Facts & Trivia - 3


The average strawberry has about 200 seeds. Strawberry seeds are all those little bumpy spots on the surface of the berry.


More than 40 species of


strawberries have been identified in the wild. Wild strawberries are all fairly small in size, and it wasn’t until the 18th century that attempts to produce straw- berry plants with larger berries were successful.


One acre of land planted with strawberry plants produces about 50,000 pounds of strawberries.


•Organic Fruits & Vegetables


• Gourmet Cheeses • Local Wines


• Health & Wellness • Bulk Foods • Dried Fruits & Nuts • Sandwiches & Salads


OPEN DAILY 8am-8pm • 1691 Gravenstein Hwy N, Sebastopol www.andysproduce.com


“Knowledge is a treasure, but practice is the key to it.” ~ Lao Tzu UPBEAT TIMES, INC. • November 2018 • 9


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