4 ms·

Oh, I remember when these were popular for dot-com who just needed to get to the next round. Many did not. And a loan has baggage that equity doesn't. Edit: B

Oh, I remember when these were popular for dot-com who just needed to get to the next round. Many did not. And a loan has baggage that equity doesn't. Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm.

mohaine 4y ago
I think the most common usage in personal home buying is to get from closing of your new home to the closing of your existing home. Usually you want to close on your purchase of a new home a bit earlier then you close on the sale your existing home so that you (1) Have a place to live (2) can do a single move instead of a double move. The down side is that you can't transfer the equity of your current home to your new home. Bridge loans get you over this gap with small risk so the price isn't to much. You basically get a separate loan for your current house's equity that is paid off at closing. The issue would be if the sale of you current home fell through for some reason, hence the issues in 2008 when there were so many unsold homes on the market.
- djbusby 4y ago
  I should have been more clear. The housing bridge loans I'm talking about were for first mortgage, on SISA, and pushed by LOs. They really stretch the borrower. The case you describe also happens, I'm just talking about a different case.
bArray 4y ago
> Oh, I remember when these were popular for dot-com who just needed to get to the next round. One of the best skills to learn is when to stop throwing good resources after bad. Sure, maybe you need just a little more to get over the finish line, but more than likely you are just investing more resources into delaying failure. People often bring up Elon Musk and Tesla as a positive example of perseverance, where he was apparently sinking personal money to keep the company alive. It did pay off in retrospect, but there was a very large chance it didn't - and we're just celebrating survivor bias. > Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm. You wait, this bubble is about to pop. Not a great time to have large financial obligations. I suspect this will make 2008 look like nothing (people weren't struggling to fuel their cars or eat then).
- nkozyra 4y ago
  > (people weren't struggling to fuel their cars or eat then). These are cause and effect, though. Average gas shot up to $4 in 2008, too.
- spamizbad 4y ago
  Gas and food prices would likely drop like a stone if we are facing another 2008-like crisis. A handful of people made a big bet that during the credit crunch we’d see massive inflation and took big bets against the dollar and cheap oil and lost their shirt
  - ptero 4y ago
    > Gas and food prices would likely drop like a stone if we are facing another 2008-like crisis. Not necessarily. For deflation to occur, especially in staple goods (for which demand is sticky) in addition to stable or contracting money supply (M2) you need significant supply side growth. Neither is certain. I personally doubt that politicians will hold the purse closed at a time when lower and middle income voters are stretched thin. Deflation-causing policies also tend to lower tax revenues. My bet instead is that crisis or not we will likely see debt deflation via below inflation interest rates. Just a personal position, I do not have a crystal ball.
- com2kid 4y ago
  > You wait, this bubble is about to pop. Not a great time to have large financial obligations. The people buying these houses have good financial means, when I bought in 2021 the bank looked through all my finances in depth, and they were super conservative about everything. For example, I own an existing townhome, before agreeing to give me a new mortgage, the bank made me show a signed contract with a tenant for my townhome to demonstrate the townhome wouldn't be a financial burden. At least in the city I live in, Seattle, the housing supply is so obscenely constrained that only people who can go above and beyond to show they can pay, are even being granted approvals by the banks.
  - Kon-Peki 4y ago

mohaine 4y ago

I think the most common usage in personal home buying is to get from closing of your new home to the closing of your existing home. Usually you want to close on your purchase of a new home a bit earlier then you close on the sale your existing home so that you (1) Have a place to live (2) can do a single move instead of a double move. The down side is that you can't transfer the equity of your current home to your new home. Bridge loans get you over this gap with small risk so the price isn't to much. You basically get a separate loan for your current house's equity that is paid off at closing. The issue would be if the sale of you current home fell through for some reason, hence the issues in 2008 when there were so many unsold homes on the market.

djbusby 4y ago
I should have been more clear. The housing bridge loans I'm talking about were for first mortgage, on SISA, and pushed by LOs. They really stretch the borrower. The case you describe also happens, I'm just talking about a different case.

bArray 4y ago

> Oh, I remember when these were popular for dot-com who just needed to get to the next round. One of the best skills to learn is when to stop throwing good resources after bad. Sure, maybe you need just a little more to get over the finish line, but more than likely you are just investing more resources into delaying failure. People often bring up Elon Musk and Tesla as a positive example of perseverance, where he was apparently sinking personal money to keep the company alive. It did pay off in retrospect, but there was a very large chance it didn't - and we're just celebrating survivor bias. > Edit: Bridge loans were also really popular to stretch home buying power in 2006,2007. Hmmm. You wait, this bubble is about to pop. Not a great time to have large financial obligations. I suspect this will make 2008 look like nothing (people weren't struggling to fuel their cars or eat then).

nkozyra 4y ago
> (people weren't struggling to fuel their cars or eat then). These are cause and effect, though. Average gas shot up to $4 in 2008, too.
spamizbad 4y ago
Gas and food prices would likely drop like a stone if we are facing another 2008-like crisis. A handful of people made a big bet that during the credit crunch we’d see massive inflation and took big bets against the dollar and cheap oil and lost their shirt
- ptero 4y ago
  > Gas and food prices would likely drop like a stone if we are facing another 2008-like crisis. Not necessarily. For deflation to occur, especially in staple goods (for which demand is sticky) in addition to stable or contracting money supply (M2) you need significant supply side growth. Neither is certain. I personally doubt that politicians will hold the purse closed at a time when lower and middle income voters are stretched thin. Deflation-causing policies also tend to lower tax revenues. My bet instead is that crisis or not we will likely see debt deflation via below inflation interest rates. Just a personal position, I do not have a crystal ball.
com2kid 4y ago
> You wait, this bubble is about to pop. Not a great time to have large financial obligations. The people buying these houses have good financial means, when I bought in 2021 the bank looked through all my finances in depth, and they were super conservative about everything. For example, I own an existing townhome, before agreeing to give me a new mortgage, the bank made me show a signed contract with a tenant for my townhome to demonstrate the townhome wouldn't be a financial burden. At least in the city I live in, Seattle, the housing supply is so obscenely constrained that only people who can go above and beyond to show they can pay, are even being granted approvals by the banks.
- Kon-Peki 4y ago