A bridge loan can be a helpful tool for today’s homebuyers. A bridge loan allows you to use the equity in your current home for a down payment on your new home. With today’s market, so many people want to try and buy before selling their current home. A bridge loan can allow you to do that. It can also help those that are looking to downsize.
Who should use a bridge loan? There are three groups of buyers that may use a bridge loan.
Retirees
Frequently retirees have a lot of equity in their current and may be downsizing to a new smaller home. They may have enough equity to pay cash for the new home but have not sold their current home. A bridge loan allows them to buy without selling. Once they sell their current home, they pay off the bridge loan.
Existing homeowners
Bridge loans allow an existing homeowner to use the equity in their current home to purchase a new home without selling first. You may need to qualify with both homes so it may stop some buyers. However if you have a purchase agreement on the current home but are not closing at the same time, the bridge loan can help.
Investors
A bridge loan allows investors to use the equity in their current properties to purchase additional homes. Many investors will use a line of equity rather than a bridge loan, but it may be an option if you are looking to sell one of your current properties to buy a new one.
Our bridge loan allows you to buy without selling, it’s a 120 day term (4 months), there aren’t any payments collected on the bridge loan term. If you have a purchase agreement on your current home and all financing contingencies have been met, you do not need to use the payment on your current home to qualify. The amount of a bridge loan will vary based on the equity you have in your home.
With the current market, using a bridge loan will allow you to find a new home and then sell your home. It’s one more tool that you can use to help make you a stronger buyer in our market.
Leslie Vanderwerf, NMLS ID#335509, Cross Country Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website