Buying a new home while still owning your current one can be a daunting prospect. The logistics of selling your existing property or uncertainties about the real estate market might make the transition seem overwhelming. However, there is a valuable solution worth exploring: bridge financing.
Check out my video for a deeper dive into what you need to know when it comes to Bridge Financing!
Examples used in this video are for illustrative purposes only.
Bridge financing is essentially a financial tool that bridges the gap between selling your existing home and buying a new one. Traditionally, the sequence involves selling your house, getting the funds, and then purchasing a new property. But what if you want to switch the order or need a backup plan? This is where bridge financing comes into play.
There are two primary ways bridge financing can be utilized:
1. Advancing equity to purchase the new property: When your house hasn’t sold yet, bridge financing allows you to access a percentage of the equity, enabling you to proceed with the purchase of a new property. This advance can sometimes be arranged with minimal to no additional fees or closing costs, making it a viable and cost-effective option. Once your current home sells, additional proceeds can be used to readjust the loan balance, resulting in the same mortgage terms and costs as if you had followed the traditional route.
2. Temporary mortgage solution for two home payments: For those concerned about qualifying for two mortgage payments, bridge financing ranges from options at the same rate and cost as a traditional loan to other loans that facilitate a temporary mortgage on the new property. This allows you to transition smoothly while waiting for your current home to sell. After the sale, a refinancing process helps adjust the mortgage at the prevailing rates.
The beauty of bridge financing is that, when executed strategically, it can match the financial terms, rates, and costs of a traditional mortgage. It provides flexibility, allowing homeowners to pursue their dream property without the constraints of sequential buying and selling. Bridge can still be a viable solution, especially when considering potential benefits like maximizing profits on the sale of your current home or securing a better deal on your new property due to a quicker closing.
Contact us today to explore bridge financing and create a customized plan to seamlessly transition into your new home!
Stephanie Johnston
Combining over three decades of industry knowledge, The Johnston Team is thoroughly dedicated to matching each borrower to the perfect loan program.
Team leader Stephanie Johnston began her mortgage career shortly after graduating from The University of North Texas. Utilizing an approach that combines both creative and analytical problem solving Stephanie has built a reputation for offering honest, detail-oriented guidance for her clients. As part of Service First Stephanie has a place to build her team in an environment dedicated to putting borrowers first.
Whether you’re purchasing your fifth home or your first The Johnston Team has the knowledge and experience to find the loan that’s right for you.
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