If you find your dream home but haven’t sold your existing property yet, a bridge loan can provide you with the funds you need. Here’s an overview of bridge loans and how they can help you seize the right opportunities.
Understanding Bridge Loans
A bridge loan, aptly named because it “bridges” the gap between the purchase of a new home and the sale of an existing property, is a short-term loan that allows you to make an offer on a new home without having to sell your current one first. It essentially provides temporary financing to buy a new home before you sell your existing one.
How Does a Bridge Loan Work?
A bridge loan is a short-term loan, typically up to one year, with relatively high interest rates. The amount you can borrow depends on the amount of equity you have in your current home. In most cases, you’ll need to repay the bridge loan in full once your existing home sells.
Advantages of Bridge Loans
- Purchase Without Selling: A bridge loan allows you to buy a new home without having to sell your existing one first, which can be advantageous in a competitive market.
- No Contingencies: By using a bridge loan, you can make a non-contingent offer on a home. This can make your offer more attractive to sellers.
- Flexible Repayment Terms: Some lenders offer flexible repayment terms, allowing you to pay off the bridge loan once your current home sells.
We Can Help
A bridge loan can be an effective solution if you’re looking to purchase a new home before selling your current one. Meridian’s Team of experienced Mortgage Loan Officers can provide you with the specific information needed to determine if a bridge loan is the best option to meet your particular requirements.