Ensuring that you are able to purchase a new home even though your home you are presently living in hasn’t sold yet, you may require some bridge financing. Often people will arrange for this possibility at the time of arranging pre-approval for a mortgage.
An excellent article on bridge financing is:
“If you are planning to buy a home and sell your current property and the purchase of a new home is closing before the sale of the old, it should be no surprise that you need short-term financing in place to have the funds necessary to buy that new home the day it closes. …. the case for people who are closing the purchase of their new home before the sale of the old home, as funds from the sale of the old home will not be available until the sale is completed.” Read Article…
Some points to keep in mind when Bridge Financing:
- Lenders will not normally advance more than 90% of the value of your current property which includes the principal of your existing mortgage.
- Bridge loans cost more.
- Bridge loans are typically time limited from the date issued.
- Bridge loans carry extra fees, some or all of the following: Administration, Appraisal, Escrow, Title policy, Notary, Recording.
- Bridge loans can take up to 10 days to approve.