Bridge Loans in Oklahoma: The Path to ‘Buy Before You Sell’ Using Home Equity
Oklahoma homeowners know that buying and selling a house at the same time can be a real challenge. The timing alone can be frustrating because it’s rare to perfectly match the sale of your current home with the purchase of your next one.
On top of that, you could face financial strain when you can’t sync timelines: managing two mortgage payments, paying for a temporary rental, and managing multiple moving costs. As the housing market continues to shift, you find yourself struggling to get a good deal on both sides. But what if you could seamlessly transition from your current home to the next? Here’s a viable solution: bridge loans.
As a short-term financing solution, bridge loans empower you to leap ahead to purchase your new Oklahoma home before saying goodbye to your old one, helping you keep all the pieces in place without the interim shuffle.
DISCLAIMER: This post is intended for educational purposes, not financial advice. If you need assistance navigating the use of a bridge loan in Oklahoma, HomeLight encourages you to reach out to your own advisor.
What is a bridge loan, in simple words?
Imagine you’ve found the perfect new home in Oklahoma, but your current one hasn’t sold yet. A bridge loan swoops in as your financial lifeline. In simple terms, it’s a short-term loan that uses the equity in your existing home to help finance the new purchase.
Think of it as a stopgap that gives you the cash needed for a down payment and closing costs linked to your new home acquisition. This financial bridge carries you over the gap between buying your new property and selling your old one.
Generally, bridge loans last from six months to a year. While they may have higher interest rates due to their temporary nature, they offer the agility to move on your terms.
How does a bridge loan work in Oklahoma?
Imagine you’ve stumbled upon an Oklahoma house that checks all your home shopping boxes. But there’s a hitch: your current home is still waiting for the right buyer. A bridge loan offers you a way to move forward. By tapping into the equity of your unsold home, you can secure the funds needed for the down payment and closing costs of your new abode.
In many cases, the financial institution where you’re seeking a mortgage for your new Oklahoma home will manage your bridge loan as well. They typically expect your home to be on the market as they offer the bridge loan with a 6- to 12-month term.
Your lender will take a close look at your debt-to-income ratio (DTI) — an equation that takes into account the payments from your current mortgage loan, your new payment on the property you’re purchasing, and the interest-only payment on the bridge loan you are requesting. Lenders consider all these financial factors to ensure you can make the payments on both properties in the event that your home does not sell right away.
But if your old house is on the brink of a sale, with a buyer who has secured loan approval, the loan company might decide to consider only your new mortgage payment in their calculations.
What are the benefits of a bridge loan in Oklahoma?
Securing a bridge loan in Oklahoma can unlock several advantages that streamline the transition between selling your old home and settling into your new one:
