As a homeowner, the idea of moving from your current home to a new home can seem like a headache. How do you handle a new mortgage, when you still are paying your current mortgage? So what happens when you’ve found the perfect home, but you have yet to sell your current home? You don’t have to give up on your dream home, thanks to a financing solution called a bridge loan.
What is a Bridge Loan?
A bridge loan is a short-term loan that can help finance the transition from a borrower’s current home to their new home. Since most people can’t afford two mortgages at the same time, bridge loans save the day by bridging the gap between mortgages.
How Do Bridge Loans Work?
Bridge Loans are meant to last only a short time – typically 6 to 12 months. When using a bridge loan, you are able to use the equity in your current home to put towards your new home, while you put your existing home on the market – all without having to wait until the home sells. You can then use the funds from the sale of your home to pay the loan off as quickly as possible. Your current home’s acquired equity is essentially the asset backing up the bridge loan while you pay the down payment for your new home.
Bridge loans save the day by bridging the gap between mortgages.
Benefits of a Bridge Loan
The main benefit of a bridge loan is the ability to quickly secure short-term financing without having to wait until you sell your home. In some circumstances, you also may be able to delay payments for several months. A few circumstances that could benefit from a bridge loan:
- You can’t afford a down payment without the proceeds from your current home
- Closing on your current home is scheduled after the closing date for your new home
- You have to transition jobs quickly, but don’t have enough time to sell your home before securing your new home
- You’re building a new home and aren’t prepared to sell your old one yet because you still need a place to live
- Sellers in your area won’t accept contingent offers
Our team of mortgage experts can help you get the financing you need quickly, even if your current home is still on the market. Talk to one of our mortgage experts today to see if a bridge loan is the best option for you!
The included content is intended for informational purposes only and should not be relied upon as professional advice. Consult with a finance professional for financial advice. Consult with a mortgage professional to address your mortgage questions or concerns. This is an advertisement. Prepared 05/09/2019.