The Smiths purchase a $600,000 house and must sell their old home in order to make a 20 percent down payment plus closing costs of $7,000 on the new house.
Currently, they have a mortgage balance of $100,000 on their old home, which has been appraised at $300,000. They have been pre-approved by the lender to qualify for a $480,000 mortgage in the new home. The lender offers a bridge loan at 9 percent simple interest
The closing date on the new house is February 13, and the Smiths sell their old home on May 15. How much must they borrow if they take a bridge loan?