How to Use a Bridge Loan to Buy a New Home

Filed under: Home Buying Tips

Many home purchases are done for people who already own a home, and they are ready to upgrade to a new property. This scenario applies to people who want to move to a bigger home, as well as those nearing retirement who are ready to downsize. They have the intention to sell their current home, then use that equity to roll into the purchase of the next home.

Where Will They Come Up with the Cash to Buy the New House?

The problem is that these homeowners need to make an offer on the new property contingent on selling the current property. If all their cash is buried in the current home, then it can be hard to come up with a down payment before the current property is sold.

The simplest answer is to sell the first property, then use the equity to fund the purchase of the next home. But, the seller might be concerned about this situation, because the buyer’s offer is contingent on the sale of the first property.

A bridge loan is a solution that solves this problem. The loan is granted with the current home as collateral. This option frees up the equity so that they can buy the new home. Then, the buyer can close on the new house while owning the old one. This process makes it possible to put together an attractive, non-contingent offer.

Is a Bridge Loan Right for You?

In the past, a bridge loan was a financing option that was hard to come by. But, we have found a great solution that makes it easier to get this type of financing. We can help you obtain the financing that you need while your house is actively being listed for sale so that you don’t have to wait on the purchase of the new home.

The advantage is that this process smooths the transition so that you don’t have a gap between the time that your home sells and the time that you can move into the new property.

Was this information helpful? Like, comment, or share this post on social media. Here at Franklin Loan Center, we are always looking for ways to educate the public about loan options that are available. Feel free to contact me anytime if you have questions about bridge loans or any other type of financing. I am happy to answer your questions and help with anything that you need.

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