Is a Bridge Loan the Solution to Your Problem?

What is a bridge loan? When’s the right time to use one?

A bridge loan is a short-term loan where a homeowner takes the equity out of their existing home before it’s sold. This bridges the gap when funds are needed but not yet available. Here are a few scenarios where a bridge loan could be the ideal solution:

1. Your equity is tied up with your existing home. If you’re unable to make an offer and close on a house because your equity is tied up in the home you’re living in, a bridge loan will solve that issue.

2. Home sale contingencies. If you’ve lost out in multiple-offer situations due to a home sale contingency, a certified pre-approval for a bridge loan will strengthen your offers and potentially remove that contingency.

3. You need to move fast. It could be that you need to relocate for a job or your family is expanding, necessitating a swift move. A bridge loan will help you buy your house and make your move, allowing you to focus on the home sale later.

4. You’re worried your home will sell too quickly. This can happen when inventory is low and demand is high, which is what’s happening in our current market.

5. You need financial flexibility. Suppose you were thinking of selling off some stocks to fund your down payment on the new home. Well, a bridge loan could get you the necessary funds without you having to tap into your portfolio.

A bridge loan isn’t necessarily right for everyone, but it could be a solution if you find yourself in one of these situations. If you have any questions about bridge loans or real estate in general, feel free to reach out to us. We’d love to help you.