How does a Swing Loan Work?
If you need temporary financing to help you purchase a new home while you are waiting for your current home to sell, Traditions Bank has a Swing Loan (also known as a Bridge Loan) product that may be right for you. This loan offers competitive rates and flexible terms to fit your situation. It also offers interest-only payments.
Swing Loans are also referred to as Bridge Loans because they provide the short-term financing you need to help you bridge the gap between paying off your current mortgage and putting a down payment on a new home. While this is not the only way to get the funding you need, it is one of the most common ways for homeowners to secure short-term financing when moving to a new primary residence.
What types of Swing Loans are available? How do you qualify for a Swing Loan? Is a Swing Loan the right option for you? Read on to learn about Swing Loans offered by Traditions Bank.
Why would you need a Swing Loan?
When you already own a home and want to buy a new one, you likely plan on using the equity you have built up in your current home as all or part of the down payment. However, if you close on the new house before you have sold your current one, you need a placeholder for the money you expect to get from the sale.
This is where the Swing Loan comes in. You may be eligible to borrow funds against your current home that can be used as all or part of the down payment on the new home. As soon as you sell your home, the profits from the sale will be used to repay the Swing Loan.
Our Swing Loan product allows you to make interest-only payments. This means you do not have to pay on the principal of the loan because the principal will be paid off when your home sells.
Swing or Bridge Loans are meant as short-term financing solutions. Most are designed to last no more than six months. Some are paid off in as little as a few weeks. Because the repayment of these loans depends on whether or not you sell your home, interest rates for Swing Loans may be higher than a regular home loan. There are many variables involved, so speak with a Traditions Bank Relationship Manager about the options available for your situation.
Who Qualifies for a Swing Loan?
Just about any homeowner can apply for a Swing Loan. To qualify, you need to have at least some equity in your current home. Your current home will be held as collateral until the Swing Loan is satisfied.
What are the benefits of a Swing/Bridge Loan from Traditions Mortgage?
There are many advantages to applying for a Swing Loan with Traditions Mortgage. They include:
- Fast approval: You can generally complete the loan approval process in less time than other loans. This allows you to act more quickly in making an offer on the new home you want.
- Avoiding an early payoff penalty: You can pay off your Swing Loan at any time without facing an early payment penalty, which is helpful since you may only need the loan for a few weeks or even days.
- Interest-only payments: By paying only the interest on the loan, you have more funds available so you don’t have to utilize your savings to bridge the gap between selling and purchasing.
A Swing Loan lets you move forward in the home buying process even as your current home stays on the market. You can feel confident you have the means to finance your new house.
Contact us to learn more about Swing Loans in Central Pennsylvania
Are you interested in applying for a Swing Loan to help you with your new home purchase? Get in touch with one of our Relationship Managers today. We can discuss your loan choices and find the program that works best for you. Give us a call or stop into one of our convenient locations to get started.