How and When To Use A Bridge Loan
How and When to Use a Bridge Loan
Picture this: Your dream job requires you to relocate quickly, leaving no time to sell your current home before purchasing a new one. Or perhaps you’re a homeowner juggling the sale of your current home while trying to buy another. This can create a cash flow challenge, especially when you need to cover down payments and other costs for the new home before receiving proceeds from your first home’s sale.
This is where bridge loans, also known as “swing loans,” can be a valuable solution.
What is a Bridge Loan?
A bridge loan provides short-term financing by tapping into the equity of your current home before it’s sold. It’s not meant to replace a traditional mortgage but serves as a temporary funding option to “bridge the gap” between selling your current home and purchasing a new one.
Term: Typically 11 months, with no prepayment penalty.
Use: Covers down payments, closing costs, or even staging expenses to sell your home faster and at a higher price.
Repayment: Once your current home is sold, the proceeds can be used to pay off the bridge loan. Any remaining balance can be refinanced into a long-term mortgage.
When is a Bridge Loan a Good Fit?
A bridge loan may be right for you if:
You’ve chosen a new home in a seller’s market where homes sell quickly.
The seller won’t accept an offer contingent on selling your current home.
You can’t afford the down payment on your new home without selling your current one first.
Key Benefits
Access to quick cash for a down payment or closing costs.
Eliminates the financial burden of waiting for your current home to sell.
Provides flexibility for staging your home to maximize its sale price.
Next Steps
If you think a bridge loan might be a good fit, give me a call! I can provide a detailed flier explaining the financial details and help you determine if this is the right solution for your situation.
My door is always open—let’s make your transition as smooth as possible.
Cheers!
