What Is A Gap Mortgage

What Is A Gap Mortgage

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A gap mortgage, also known as a "bridge" or "swing" loan, is a real estate loan obtained to cover the transition between selling a current home and buying a new home. A gap mortgage is a temporary loan, normally used between the end of loans taken out to develop a property and the start of the permanent mortgage loan.

When refinancing with a CEMA loan, you take the existing mortgage, consolidate it with the new one, and just pay the tax on the gap between the two." For example, if a homeowner has a principal balance of $100,000 on her mortgage, then refinances with a new lender for a mortgage of $200,000, she will only have to pay a mortgage recording tax on.

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The definition of a gap mortgage depends on where you are located. In New York, it’s a special structure that allows you to use your existing mortgage even after a refinance (or sometimes a new purchase), letting you avoid paying the New York State mortgage tax.

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Gap Financing is a term mostly associated with mortgage loans or property loans such as a bridge loan. It is an interim loan given to finance the difference between the floor loan and the maximum permanent loan as committed.

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According to InvestorDictionary.com, a gap mortgage is an interim loan used between the end of loans, or floor loans, while developing property, and the start of a permanent mortgage taken out by the person purchasing the property.

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