Bridge financings is sometimes used when an owner needs extra financing between buying a new home and selling the previous home.
Let’s say that you are purchasing Home B and selling Home A. However, the closing date for Home B is October 1st and the closing date for Home A is October 15th. Between the two dates, you will be temporarily owning both houses at the same time. For a short period of time, you will have two mortgages – one on Home A and one on Home B. The biggest problem is that you need to use the proceeds from the sale of Home A as a down payment in order to purchase Home B. Remember that you still need a down payment to get a mortgage on Home B. Bridge financing is for the down payment during this time period.
When you obtain bridge financings, a second mortgage is placed on Home A while waiting for it to sell. This financing is used as a down payment for the Home B. Once Home A is sold, the mortgage on Home A is paid off and the bridge financing is paid off.
Are you selling your home, hoping to use its equity as a down payment on your next home? Just in case you end up with different closing dates, you should speak to someone who has knowledgeable. It’s important to know your options. Contact me now for a personalized solution to your unique situation.