Understanding Bridge Financing How To Buy A New Home Before You Sell Your Current One

Dated: 10/10/2017

Views: 39

Understanding ‘Bridge’ Financing: How to Buy a New Home Before You Sell Your Current One

Understanding 'Bridge' Financing: How to Buy a New Home Before You Sell Your Current OneOne of the biggest challenges a homeowner can face when looking to upgrade or move is trying to sell their current home while buying another. If most of your net worth or equity is locked up in your current house, you will need to move it into cash to help fund the purchase of your new home. The alternative is to wait until your home is sold and you receive the funds before trying to buy a new one – but you could end up waiting for months.

The great news is that there are bridge financing options available to homeowners which can help to get things moving. Let’s take a look at how a bridge loan works and how it can help you to buy a new home before your sale is finalized.

How Does A Bridge Loan Work?

First, it is important to note that a bridge loan isn’t the same as your mortgage loan for your new home. Instead, when you take out bridge financing, you’ll borrow against the equity that you’ve built up in your current home. You’ll then be able to use these funds to help cover the costs involved with closing on your new house. Then, when you sell your old home, you’ll use part of the proceeds of that to pay off your bridge loan.

The main benefit you’ll get from this approach is a bit of extra time and flexibility in selling your home. Instead of having to accept a low offer or rush into a sale, you’ll have a bit of breathing room to take the best offer when the time is right.

Try To Avoid Making A Contingent Offer

Your bridge financing can also help you to make the winning bid and close on your new home faster. One piece of advice that some real estate agents and other experts have shared is to avoid making an offer on a new home that is contingent on selling your current home. This is especially true if you are buying in a hot real estate market where there are other buyers competing against you for the same home. If you’re already funded, you can submit an offer to buy the home as soon as the seller is ready.

As you can see, taking out a bridge loan against the equity of your current home is a great way to cover the costs of buying a new home. For more information about how bridge financing works and how you can pair it up with a mortgage for a new house or condo, contact us today. Our team of mortgage advisors is happy to share financing options that fit your needs and budget.

For more info visit: http://www.bondstreetmortgage.com

Want to Advertise on this Site?

Latest Blog Posts

Whats Ahead For Mortgage Rates This Week January 22 2018

What’s Ahead For Mortgage Rates This Week – January 22, 2018 Last week’s economic news included readings on home builder confidence, housing starts and building permits issued. Weekly

Read More

3 Ways That Buying A New Construction Home Beats Buying An Existing One Every Time

3 Ways That Buying a New Construction Home Beats Buying an Existing One, Every Time Are you in the market for a new house? Whether you are a first-time home buyer or are upgrading to get more,

Read More

Looking To Buy A Home In 2018 And Dont Know Where To Start Heres A Few Tips

Looking to Buy a Home in 2018 and Don’t Know Where to Start? Here’s a Few Tips Are you a renter that has become tired of paying someone else’s mortgage and not building any equity? Or a

Read More

Renovating In 2018 Cashout Mortgage Refinancing Might Be The Best Way To Fund It

Renovating in 2018? Cash-out Mortgage Refinancing Might Be the Best Way to Fund It If you are a homeowner thinking about a significant home renovation in 2018, you have probably already considered

Read More