How to Use a Bridge Loan to Purchase Your Next Home
/This month we have a new contributor! He is Carter Campbell with Houzd Mortgage. I’ve worked with Carter many times and he knows his stuff! He’s going to talk about how bridge loans can help you purchase your next home before selling your current one.
It’s no secret the process of buying a new home can be stressful, especially if you find a home you love that you can’t outright afford to buy without selling your current property first. Top it off with knowing that the market can change quickly and if you don't act fast someone else could snatch up the new home while you wait for your home to sell.
There is a loan program called Bridge Loans that may be the answer!
Bridge Loans offer a unique opportunity for current homeowners. Bridge loans can provide you the money you need to buy your next house without having to wait until your old one sells.
This short-term loan will allow you to take out equity on your current home and use that money to pay for your new home. Then once you sell your old home you can use that money to pay off the bridge loan.
For example, if your current primary residence is valued at $300k and you owe $200k on the mortgage we can use a bridge loan for up to 90% of the current home’s value. The bridge loan will be for $270k, this amount is used to pay off your current mortgage and give you an extra $70K for a down payment on your new home.
You don't have to worry about going through two rounds of closing or being homeless in the meantime. Plus, interest rates are more competitive on these loans so you can potentially even save some money.
An important note is that bridge loans require good credit scores and at least 20 percent equity in your current home.
Bridge Loans are a great option if you want to move quickly with a new purchase and not want to wait for your current home to sell.
If you think a bridge loan could work for you or if you'd like to learn more about how they work, give me a call and I'd love to go into more detail.