Found the right home but haven't sold your current one yet? Timing the sale of one home with the purchase of another can be challenging, especially in a competitive market.
A bridge loan may provide short-term financing that helps eligible homeowners use available equity from their current property while purchasing their next home. Redwood Mortgage Services helps borrowers in Annapolis, Anne Arundel County and throughout Maryland explore bridge loan options and determine whether this type of financing fits their situation.
A bridge loan is a short-term financing option that may help a homeowner purchase a new property before completing the sale of their current home.
For eligible borrowers, a bridge loan may allow available equity in the current property to be used as part of the financing strategy for the next home. This can help address the timing gap that sometimes occurs when a homeowner finds the right property before their existing home has sold.
Bridge loan structures and qualification requirements vary. Factors such as available equity, income, credit, assets, the existing mortgage and the financing for the new property may all be considered.
Want a deeper explanation? Read our Bridge Loans Explained: How to Buy Your Next Home Before Selling Your Current One article.
Found the right next home before your current property has sold? A bridge loan may help address the timing gap between the two transactions.
Homeowners with sufficient available equity may be able to use that equity as part of a bridge financing strategy for their next purchase.
Depending on the financing structure and borrower qualifications, bridge financing may help some buyers make an offer without depending on the sale of their current home to close first.
A bridge loan is designed to provide temporary financing during the period between purchasing a new home and selling an existing one. Depending on the program, available equity in the current home may be used to help provide funds needed for the next purchase.
For example, a homeowner may find a new property they want to purchase before their current home is under contract or before that sale has closed. Rather than waiting for the proceeds from the current home, bridge financing may provide access to funds that can help complete the new purchase.
When the existing property is eventually sold, the proceeds may be used to repay the bridge financing according to the terms of the loan.
Important: Bridge loan structures vary by program. Borrowers should consider the costs, repayment terms, existing mortgage obligations and the possibility of carrying expenses on more than one property for a period of time.
Home-Sale Contingency:
The purchase may depend on the buyer successfully selling their current home.
Bridge Loan:
May allow an eligible buyer to move forward with a new purchase before the current home is sold.
Home-Sale Contingency:
The offer includes a condition related to the sale of the buyer's existing property.
Bridge Loan:
Depending on the financing structure and borrower qualifications, the new purchase may not need to depend on the existing home selling first.
Home-Sale Contingency:
May reduce the need for temporary financing but can affect the timing and structure of the purchase.
Bridge Loan:
May provide greater timing flexibility, but borrowers should consider financing costs and the possibility of temporarily carrying expenses associated with both properties.
Neither approach is automatically better. The appropriate strategy depends on the borrower's finances, available equity, timing, current property and goals for the next purchase.
Redwood Mortgage Services helps homeowners explore bridge financing from our Annapolis office. For buyers who find their next home before selling their current property, bridge financing may provide an option for managing the timing between the two transactions.
We work with borrowers in Annapolis, Anne Arundel County and throughout Maryland, as well as our other licensed markets. Because bridge loan programs and structures can vary, we review each borrower's circumstances individually, including available equity, existing mortgage obligations and financing needs for the new property.
Buying a new home while preparing to sell your current one can involve several moving pieces. Stuart Kiehne can review your situation, discuss available financing options and help you understand whether bridge financing may fit your plans.
Frequently Asked Questions About Bridge Loans
Bridge loans are generally intended as short-term financing during the transition between properties. The available loan term and repayment requirements depend on the specific program.
Potentially. For eligible borrowers, bridge financing may provide access to funds that can help with a new home purchase before the existing property has sold. Qualification and available structures vary by program.
Available equity in the current property may be an important part of a bridge financing strategy. The amount of usable equity and how it is calculated depend on the loan program and the borrower's circumstances.
Requirements vary by program. Some bridge financing options may be available before the existing property is under contract, while others may have different requirements related to the current home's sale.
Depending on the financing structure and borrower qualifications, bridge financing may allow a buyer to purchase a new home without making the closing dependent on the prior sale of their current property.
Depending on the loan structure, proceeds from the sale of the existing property may be used to repay the bridge financing according to the terms of the loan.
Redwood Mortgage Services helps eligible homeowners in Annapolis, Anne Arundel County and throughout Maryland explore bridge financing options for purchasing a new home before selling their current property. Available programs and qualification requirements vary.