Buy Now, Sell Later With a Bridge Loan
Photo by Maria Ziegler on Unsplash
It’s a common problem: You want to buy a new home, but your money is tied up in your current house. If you sell first, it would free up that equity, but that would involve a disruptive process of moving out before you have a new perch to land on. So how do you get your new dream home without making yourself temporarily homeless? Bridge loans can help you by freeing up money for a down payment before you sell. Bridge loans are not new, but our financing team at CrossCountry Mortgage (CCM) has a new program that is a real game-changer.
Traditionally, bridge loans were structured as a new loan on top of your existing mortgage. The amount of that loan is dependent on how much equity you have in your existing home, plus how much the combined cost of the two loans stacks up against your income. (Lenders use debt-to-income ratios to assess their risk tolerance.) The bridge loan gets paid off with proceeds from the sale of your existing home. The lender then finances your new home, but typically at a less favorable rate, and require that you not refinance for a period of several months.
With CCM’s program, they create a single loan that encompasses both your existing property and the one you want to purchase. From the time you close on the new property, you pay interest only on the loan. Once the old property sells, the loan can be refinanced quickly, making for a faster, smoother, and less expensive transition. The bridge loan does not factor in your debt-to-income ratio, as it is based solely on the collateral of the property. Moreover, the loan gives you as strong a position as an all-cash buyer, giving you better leverage as a buyer.
Are you ready to make the move to your next dream home? Contact us, and we’ll get you started with the financing team.
Equal Housing Opportunity. All loans subject to underwriting approval. Certain restrictions apply. Call for details. CrossCountry Mortgage, LLC. NMLS3029 (www.nmlsconsumeraccess.org). Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.