A WOMAN is seeking help from financial experts after she and her husband purchased an expensive home.
While it didn’t quite fit their budget, the couple decided to take out a unique loan to fund the transaction.
GETTYA couple has been left with $1.4 million in debt after buying a new home (stock image)[/caption] The Dave Ramsey Show/YouTubeThey sought help from financial experts George Kamel (left) and Jade Warshaw (right)[/caption]“My husband and I made the dumb, dumb decision taking out a bridge loan to purchase a property,” the woman, Brenda, explained to The Dave Ramsey Show co-hosts Jade Warshaw and George Kamel.
A bridge loan is effectively a short-term loan that can provide funding to close the gap between buying a new house and selling the existing one, per Rocket Mortgage.
It basically allows homeowners to finance the new property as they wait for the old one to sell.
Financial experts and realtors typically frown on the bridge loan because its better to wait until the current property is at least under contract to sell, then the money from the sale can directly finance the new one.
Still, it can still cause a particularly difficult situation for those like Brenda if the current home doesn’t sell as expected, even under contract.
“We haven’t been able to sell our old property, and the loan is due on June 1,” she told Kamel and Warshaw.
“It has just accrued like nobody’s business.”
Brenda explained that the loan was worth $1.437 million with an interest rate of 10.99%.
Kamel and Warshaw were stunned at the rate, and immediately questioned why the original property wasn’t selling.
Brenda felt they may have listed it too high or that the square footage wasn’t big enough for buyers in the couple’s area.
Even so, the pair were under contract with a buyer for 40 days, meaning that it’s likely the buyer of their home is in a similar spot.
“Your buyers are now waiting for their contingent offer on their home,” Warshaw noted.
OFFERS AVAILABLE
She suggested that Brenda work with her realtor to ensure that the contract still allowed for other offers to be made.
That way the property could be listed on websites like Zillow as usual to indicate to buyers that there’s still a chance to get their original home.
Tips on spotting property scams
These five tips on avoiding real estate scams have been shared by The Bellamy Law Firm.
Fake Owners:
This is where properties are listed for sale by scammers who do not own them. They may ask for a deposit to “hold” the property until you can view it to lure in prospective buyers. Be wary of people who ask for money upfront and before signing any documents ensure you ask to see the tax records and deeds.Fake Real Estate Professionals:
Scammers pretending to be real estate agents. Prospective buyers can check the Board of Realtors website for the individual and their real estate license to confirm their story.Cash Offers:
Warning phrases for this are: “We pay cash for homes” and “We buy ugly houses.” This often sees people sell their homes for much less than the going market value and those who are hard-up are often victims.Predatory Lending:
Some mortgage lenders may urge borrowers to repeatedly refinance their mortgages when it is not needed so they can get more cash on hand. It is also important to be suspicious of lenders who come to you before you have requested help.Bait-and-Switch Moving Companies:
This is where the moving company gives you an estimate for your belongings and then increases the cost when they arrive which pressurizes customers to accept the new offer. Another version of this is when movers pick up your belongings but hold them hostage and refuse to deliver them until more money has been paid. People moving homes should ask for a license number from the moving company and check for complaints with official companies like the Better Business Bureau and the Federal Motor Carrier Safety Administration. It is also worth shopping around by getting multiple quotes and holding off on paying until the move has been completed.Source: The Bellamy Law Firm
However, they’d need to put a contingency in place to keep offers coming in, according to the financial experts.
So, a buyer could put in an offer, but it would have a stop loss of 90 days to close it, otherwise it would move on.
This ensures that there are always potential buyers coming in.
EXTENSION NEEDED
Aside from the contract move, Kamel noted that the house would go through foreclosure if the loan isn’t paid.
Brenda also noted the couple had savings of around $100,000, which she was advised to use to potentially get an extension from the bank to fend off consequences before their original property finally sells.
Warshaw said this was likely the best path forward, as the bank could be inclined to give a little leeway knowing that the couple was already under contract with a buyer.
Overall, the financial experts strongly urged Brenda to not terminate the current contract, because it could very well close.
Instead, she should request the loan extension and work with the realtor to ensure that offers could still be accepted on the home in the meantime.
The Dave Ramsey Show experts also recently helped a woman whose husband lied about $1 million in debt with a crucial first step.
Another American who owed $27,000 on 12 different credit cards would also be saved from “broke guy” status with three moves.
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