Closing the Gap Between Home Loans (and why it might be beneficial to you)
In the middle of purchasing your new home but still waiting for the closing of your current home? Bridge loans might be the answer. Let’s talk about what your options are and how they might help you.
Consider a contingency offer.
A contingency offer is totally dependent on when the sale of your home closes. This tells the seller that the offer will be “contingent” on when your home sells and then you will move forward with the purchase.
The downside? A buyer without contingency may secure the home sooner than your home sells. But don’t be discouraged -- some sellers might be willing to consider a contingency offer.
Bridge the Gap
Found your new home but your current home hasn’t sold in time for the new home’s closing? Think about a bridge loan. A bridge loan will cover the gap in time between your previous home loan and your new home loan.
How does it work?
It would be similar to a cash-out refinance. You take out one loan (up to 80% of the value of your current loan) and pay off your current mortgage. Then, use the remaining balance for the downpayment of your new home.
How do you qualify?
For bridge loans, you need to have good credit and equity in your existing home. Be sure to consider the timeline and keep in mind, this is only supposed to be a short-term solution.
Some more options…
You can take out a personal loan for other associated costs, possibly paying credit card debt. Personal loans are a fixed amount, fixed interest rate, and fixed term. To qualify for a personal loan, you usually need good credit and equity in your home.
Home Equity Line of Credit (HELOC)
With your home equity line of credit (HELOC), you can borrow a certain amount against the equity of your home.
You will most likely have to take out the the loan before placing your home on the market. This is because most lenders won’t approve a HELOC if your house is already on the market.
Still have questions about what you can do in between homes? Contact us @mortgagechicks on Instagram for all your mortgage needs! You can also schedule an appointment to speak with us directly- click here to schedule.
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