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Bridge Loans: Your Temporary Path to a New Home
Navigating the home-buying journey can be tricky, especially when it comes to timing the sale of your current property and the purchase of your new one. That’s where bridge loans come in. As your experienced bridge loan mortgage lender, we offer this specialized short-term financing solution to keep you from missing out on your dream home.
What Is a Bridge Loan?
A bridge loan acts as temporary financing until permanent funding is secured or debt is paid off, typically lasting 6 months to a year. They’re often used by homeowners who need to buy their next property before selling their current one — a common scenario in today’s competitive real estate market.
The Advantages of Bridge Financing
While bridge loans are designed as short-term solutions (repayment is typically between 1 to 3 years), they offer several key advantages:
- Buy your new home first: No more waiting to find your dream home until after you’ve sold. Bridge loans give you the funds to purchase upfront.
- Make a stronger offer: Going non-contingent can be the edge you need to win a bidding war or snag an in-demand listing.
- Smooth transitions: Need to relocate quickly for work? A bridge loan mortgage lender like us can facilitate sudden moves.
- More negotiating power: Avoid feeling pressured to accept a low offer on your current home. You have flexibility to wait for the right buyer.
Is a Bridge Loan Right for You?
Like any financial product, bridge loans have pros and cons to weigh carefully. On the downside, they typically come with higher interest rates and fees compared to traditional mortgages. You’ll also need substantial equity — at least 20% — in your current home to qualify.
Carrying two mortgages simultaneously is no small undertaking. Even with a bridge loan in place, you’ll need to budget for the added monthly payments until your existing property sells.
Bridge Loan Requirements
If you choose to pursue a bridge loan, expect qualification criteria similar to that of a conventional mortgage:
- Credit score: Most bridge loan mortgage lenders look for a FICO score of 680 or higher. The better your credit, the better the terms.
- Credit history: Your overall borrowing track record, including your mortgage payment history, matters.
- Debt-to-income Ratio: You’ll need to demonstrate enough income to comfortably cover your existing mortgage, plus the new bridge loan payments.
- Home equity: As mentioned, lenders require you to have at least 20% equity built up in your current property.
During the underwriting process, our team will guide you through specific document requirements as a bridge loan mortgage lender.
Bridge Loan Alternatives
For some homeowners, bridge financing may not be the ideal path. Depending on your situation, it’s worth exploring alternatives:
- Home Equity Loan or HELOC: If you have sufficient home equity, these options could provide funds without the higher bridge loan rates.
- 80-10-10 Loan: With 10% down, you take out a first and second mortgage to cover the remaining 90% of the new home’s purchase price.
- Personal Loan: Those with strong credit and low debt could potentially use an unsecured personal loan as a short-term gap financing solution.
Whatever route you choose, our team is here to help you understand all possible avenues. We’ll take a comprehensive look at your finances to determine if a bridge loan is the right solution — or if another option better fits your needs.
Buying a new home before selling shouldn’t be an impossible juggling act. Let’s explore how we can help pave the way for your next move.
Ready? Let’s get started.
Get in touch with our team of bridge mortgage loan experts to learn more about the loan option that’s best for you.
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Begin your journey towards home ownership today.