Bridge Loans: Financing a Move Before Your Current Home Sells
A bridge loan is a short-term financing option that lets a homeowner access equity in their current home to fund the purchase of a new one, before the current home has actually sold. It's typically used to avoid a contingent offer (one dependent on selling the current home first), which can be a competitive disadvantage in a market with multiple offers. Why buyers consider bridge financing In a competitive market, a purchase offer contingent on selling an existing home is often less attractive to sellers than a non-contingent offer, since it introduces uncertainty and potential delay. A bridge loan allows a buyer to make a stronger, non-contingent offer on a new home while still holding, and eventually selling, the current one. How bridge loan terms are typically structured Bridge loans are generally short-term — often six months to a year — with the expectation that the current home will sell and the loan will be paid off from the sale proceeds. Interest rates on bridge lo...