If you’re selling your home and looking to buy another one, your realtor may have mentioned the term bridge loan to you as a possibility. Residential bridge loan lenders will offer a loan to a buyer who needs to buy another home before their current home sells.
If you’re selling a home but are hoping to close on a new one before it sells, a bridge loan might be a great option for you.
A bridge loan is a temporary loan you can take out that is secured by your existing home for sale. This will bridge the gap between what your new mortgage will be and the sales price of your new home if your existing house isn’t sold before the closing.
At Cushner Capital, we will go up to 75% of you listed home’s value. So, if you have strong equity in the first leg of the transaction, you can take out enough to pay for the new home or have the down for the new home without closing escrow on your listed home.
The funding for a bridge loan is different with every lender. Most lenders will look at a bridge loan a little differently, since they are not long-term loans.Typically, you just want to borrow the money for a short time frame — anywhere from six weeks to several months. This will allow you to close on both of your homes and give a buffer in case any problems arise at the closing.
There are many benefits to using a bridge loan. The biggest benefit is that a bridge loan allows you to buy your new home before your old one sells. You’ll be able to immediately use the equity in your current home.
Your bridge loan also may not require any monthly payments for the first couple of months. This break can float you through until your home is sold.
Another perk is that if you had a contingent offer on the home you’d like to purchase, you can remove the contingency. Your offer will be a lot more appealing to the sellers without any conditions in place regarding your existing home.
A bridge loan may also relieve some pressure off of you financially. If you’re waiting for your home to sell, you can buy yourself a little more time. Maybe you can also hold out for a higher-priced offer.
As with any loans, there are always some drawbacks to think about.
With a bridge loan at a private lender, you will be paying a higher interest rate than with a standard 30-year fixed mortgage.
Having two mortgages can also be pretty stressful for some people. You’ll have two mortgages accruing interest and two payments to be responsible for.
With any loans, there are standard costs and fees that you should keep in mind. Call us for California Bridge Loans. We are your experts! At Cushner Capital Group, we understand that even great borrowers sometimes need a bridge to get them to where they need to go! Call us at (760) 845-9035.