Swing loans are mortgage loans that help borrowers who are in the process of transitioning from one home to another. Most mortgages are only backed by one property (i.e., the home in question). However, swing loans are backed by both the current home of residence and the home that the borrower is about to move into. In this way, the combined properties might provide better collateral than if only one property was used.
When Are Swing Loans Used?
Swing loans are sometimes called "bridge loans", which is another term for a relatively short-term loan that needs to be obtained quickly in order to help accomplish a certain purpose. In this case, the swing loan is used specifically to help close the property sale transaction and allow the person and their family to move into the new location.
Generally speaking, swing loans are used when the borrower hasn’t been successful in attempts to sell their home. Here, the swing loan allows them to help purchase a new home and use the equity in the first home to provide down payments for the new residence.
Are There Any Legal Issues to Consider with Swing Loans?
Swing loans for real estate can sometimes be complicated arrangements. This is due to the fact that the person is in transition, and two different properties are involved. There may be multiple parties involved, such as real estate agents, property appraisers, and mortgage lenders. Disputes over swing loans may include:
- Issues regarding loan terms and interest rates
- Disputes regarding loan qualification and approval
- Contests regarding the outcome of an appraisal (i.e. regarding the value of the home
- Loan fraud issues
- Borrower default/breach of contract
Thus, there can be many different issues associated with a swing loan. It can sometimes be necessary to file a lawsuit for damages, especially if the dispute results in a loss of profits or opportunities for one of the parties.
Should I Hire a Lawyer for Help with a Swing Loan?
Obtaining a swing loan can help a person complete a transaction involving a transfer of residence. You may wish to hire a real estate lawyer in your area if you need help securing or reviewing a swing loan agreement. Your attorney can assist you with the process and can also help protect your interests in the event of a lawsuit.