Bridge Loans in North Carolina: How to Unlock Home Equity to Buy Before You Sell
Explore bridge loans in North Carolina with this simple guide covering benefits, providers, and alternatives for seamless home buying and selling transitions.
If you’re selling your home in North Carolina while trying to buy a new one, you’re probably facing a common dilemma: managing the timing of the two transactions and making sure the finances line up. The pressure of trying to sell your current home and gather enough funds for a new one can be stressful.
You’ll need to carefully sync the closing dates and generate enough capital to keep things moving. Most homeowners in North Carolina simply resign to the stressful transition of of selling, moving out, and temporarily living in a rental home while searching for a new place.
But there’s a more streamlined solution that could be just what you’re looking for: a bridge loan. This short-term financing option in North Carolina can help bridge the gap, allowing you to purchase your new home before selling your old one and smoothing out the transition in this significant phase of your life.
Yes, You Can Buy Before You Sell. Why Move Twice?
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
DISCLAIMER: This post is intended for educational purposes, not financial advice. If you need assistance navigating the use of a bridge loan in North Carolina, HomeLight encourages you to reach out to your own advisor.
What is a bridge loan, in simple words?
In real estate, a bridge loan is a short-term financial tool designed to aid you during the overlapping period of selling your current home and purchasing a new one. This type of loan leverages the equity in your existing home, providing you with the necessary funds to make a down payment and handle closing costs on your new property.
While generally costlier than conventional mortgages, bridge loans are crafted for convenience and speed. They offer a strategic way to purchase your new home in North Carolina without the pressure of waiting for your old home to sell.
How does a bridge loan work in North Carolina?
In North Carolina, a typical situation where you find a bridge helpful loan is when you’re eager to buy a new home, but your current one hasn’t sold yet. Imagine you’ve found your dream home in the Tar Heel State, but the sale of your existing home is still pending. Here, a bridge loan steps in to utilize the equity from your old home, covering the down payment and closing costs for your new abode.
The financial institution handling your new mortgage will often manage your bridge loan. They usually require that your current home is actively listed for sale, offering the bridge loan for a duration ranging from six months up to a year.
An important factor in this scenario is your debt-to-income ratio (DTI). This ratio will include your existing mortgage payments, the payments for the new home, and any interest-only payments on the bridge loan. This comprehensive calculation helps lenders assess your ability to manage payments on both properties simultaneously, a crucial consideration given that your current home might not sell immediately.
In some cases, if your old home is already under contract with a buyer who has secured loan approval, lenders might only consider the mortgage payment for your new home in the DTI calculation. This flexibility can be a significant relief, ensuring lenders are confident in your ability to handle the financial responsibilities during this transitional period.
What are the benefits of a bridge loan in North Carolina?
Bridge loans in North Carolina have several advantages that can make your homebuying experience more flexible and less stressful.
