Monday, May 14, 2007

Strategic Financing: A Bridge Loan Too Far

by Tanta on 5/14/2007 08:34:00 AM

From the OC Register's Lansner on Real Estate Blog, counsel from a renowned real estate broker (thanks, Kevin!):

Today's buyers are most active in the (relocation), second-home and (empty-nester) segments. The traditional family looking to move up is stagnant, as they have to sell a home first and are worried about values and higher property taxes. Buyers need to think long term, meaning 3 to 5 years of living in their next home. Fix-and-flippers are dead. Renters should strongly consider buying now due to an ample selection of homes and the after-tax cost of homeownership.
So 3-5 years is "long term" for a home purchase? Thank heavens we're injecting some sanity into this whole thing; otherwise these "permanent mortgages" would look like bridge loans.
Brigadier General Gavin: What's the best way to take a bridge?

Maj. Julian Cook: Both ends at once.

Brigadier General Gavin: I'm sending two companies across the river by boat. I need a man with very special qualities to lead.

Maj. Julian Cook: Go on, sir.

Brigadier General Gavin: He's got to be tough enough to do it and he's got to be experienced enough to do it. Plus one more thing. He's got to be dumb enough to do it... Start getting ready.