What is a Bridge Loan? A Creative Homebuying Solution
So you’ve been house-hunting a bit prematurely and fell in love with your dream home — but wait, don’t you have to sell your old home first? Not always!
Selling your old home and buying your new one can mean a tricky balance of timing and funds, but a bridge loan might be the solution you’re looking for to help the pieces fit together. Bridge loans are short-term financing solutions that help homeowners purchase a new home before selling their old one.
To give you all the information you need to evaluate if a bridge loan is right for you, we spoke with Rick Ruiz, who sells homes 47% faster than other agents in the Las Vegas, Nevada, area, and Heidi Daunt, Branch Manager and owner of Treehouse Mortgage Group with more than 35 years of lending experience. Let’s dive in.
DISCLAIMER: This post is meant to answer the question, “What is a bridge loan?” and is intended for educational purposes, not financial advice. If you need assistance navigating the use of a bridge loan, HomeLight always encourages you to reach out to your own advisor.
What is a bridge loan, in simple words?
When it comes to real estate, a bridge loan (sometimes known as a swing loan or bridging loan) is a short-term loan to help homeowners during the transition of buying a new home while selling their current home. These loans will use the equity in the buyer’s current home to give them the cash to make a down payment and cover closing costs on their new purchase.
Typically more expensive than traditional mortgages, bridge loans are intended to be a convenient and fast way to make your new purchase without waiting for your old home to sell.
