Bridge loans can give you a competitive advantage

In a seller’s market, the competition for houses can be fierce. Many sellers will turn down any offer they receive that has a contingency clause (for example, a clause that states the offer is contingent on the buyer selling their own house).  This can be problematic for the buyer who does indeed have a house to sell.

To stay competitive in a tight market, some buyers make the choice of securing a bridge loan (also known as a swing loan or bridge financing).  A bridge loan covers the gap between the time a buyer closes on their new home and the time in which their old house sells.

Typically a bridge loan is structured as a one year loan.  The bridge loan pays off the buyer’s first house with the remaining funds, going toward the down payment for the new house.  There is no payment due during the 12 month term.

This is the typical bridge loan scenario for most buyers.  In some cases a buyer may qualify for a bridge loan that simply adds the cost of their new house to their current debt. 

A bridge loan can help you make a competitive offer on a property even though your first house has yet to sell.  If you’d like this extra bit of negotiating leverage, lets get together to talk about your options.  Let me know a good time to contact you.  I look forward to helping you!