In this crazy high price market - funding to buy a home when you don't have time to sell the exi
There are two options for you as an existing home owner, if you come across a new home that you would like to purchase and can't sell your existing home fast enough. The common ways to fund a down payment for the move-up home is either with a home equity loan or a bridge loan. As agents, we recommend that you contact your lender to determine the better suited option for your situation before making an offer to purchase another home.
Traditionally, obtaining a home equity loan is less expensive, but bridge loans contain more benefits for some borrowers. Most lenders will not lend a home equity loan is the home is on the market. You have to make sure you have enough equity to afford the down payment. Bridge loans are temporary loans that bridge the gap between the sales prices of a new home and a home buyer's new mortgage, provided the buyer's home has not yet sold. The bridge loan is secured to the buyer's existing home and the funds from that loan are used as the down payment on the move-up home.
Bridge loans cost more than home equity loans and buyers will be qualified by the lender to own two homes. In many cases buyers may not meet the stringent requirements. It would require making two mortgage payment, plus accruing interest on a bridge loan.
In many cases, many sellers don't like to have contingencies based on the sell of a buyer's property. As a buyer you have to determine what makes the most financial sense and what you can handle without casing too much stress!