What is a Bridge Loan?
A Bridge Loan is a short-term financing option used to "bridge" the gap between the sale of an existing property and the purchase of a new property. It provides immediate funds to cover the down payment or closing costs on a new home while the borrower is still waiting to sell their current home. Bridge loans are typically secured by the existing property and are meant to be repaid quickly, usually within a few months to a year.

Benefits of a Bridge Loan
Bridge Loans offer several significant benefits:
- Immediate Funds: Provides quick access to cash, allowing borrowers to act fast on purchasing a new property.
- No Sale Contingency: Enables buyers to make offers on new homes without needing a sale contingency for their current property, depending on the end mortgage that is needed.
- Flexible Repayment: Often interest-only payments are required until the existing property is sold, reducing initial financial burden.
- Smooth Transition: Facilitates a seamless transition between selling an old home and buying a new one, avoiding the need to move twice or find temporary housing.
Who Qualifies for a Bridge Loan?
To qualify for a Bridge Loan, borrowers typically need to meet the following criteria:
- Good Credit History: A solid credit score, typically 660 or higher, to demonstrate creditworthiness.
- Sufficient Equity: Significant equity in the existing property to secure the loan. You will need to have 20% remaining in the home. The remainder of the difference between what is currently owed on the current note and 80% of the value will be the amount you are able to “bridge.”
- Stable Financial Situation: Proof of income and financial stability to show the ability to repay the loan.
- Pending Sale: The borrower should have a plan or a contract in place to sell the existing property within a short timeframe.
Requirements for a Bridge Loan
When applying for a Bridge Loan:
- Property Appraisal: An appraisal of the existing property to determine its current market value. Your lender will order this.
- Credit Report: A credit report to assess the borrower’s credit history and score.
- Income Verification: Documentation of stable income, such as pay stubs, tax returns, or bank statements.
- Equity Verification: Proof of sufficient equity in the existing property, often demonstrated through recent mortgage statements.
- Sale Plan: Documentation of the plan to sell the existing property, such as a listing agreement or sales contract.
A Bridge Loan is an excellent solution for homeowners looking to purchase a new property while waiting to sell their current home. With quick access to funds, flexible repayment options, and the ability to move without contingencies, bridge loans provide a smooth and efficient transition between properties.
For more information or to start your application, contact MORTGAGEinc today, info@mortgage-inc.com!