What is a bridge loan?

Sometimes when you buy a home, the closing date for the home you are selling does not match the closing date of the house you are buying.    Some of the typical reasons for a difference in closing dates might be:   you want to get some renovations completed on the home being purchased before moving into it or perhaps you could not get the seller to give you the closing date that you really wanted.   So if the closing date of the home you are buying is before the closing date of the home you have sold, you will need a bridge loan.

The bridge loan amount is really your total down payment, less your deposit because the lender is advancing the rest of the mortgage money on the closing date for the home you are purchasing.



For a Bridge Loan, the lender will sometimes ask that the bridge loan be secured on the property being sold.   Some lenders will also charge a bridge loan “set-up fee”.  Also, remember that a property sale must be firm before a lender will arrange a bridge loan for the borrower(s).  And finally, lenders will not advance more than 90% of the value of the property being sold.



Always become an informed buyer.

Image courtesy of www.cartoonstock.com