Every day, countless people in our community purchase homes without knowing the financing programs available, including the bridge loan. Some are buying their very first, while others are closing on their dream retirement property. When you embark on the journey of buying a new home, there are important things you should know so you can do it well.
First off, everyone has different preferences, from the furniture you buy to the location you choose. You want everything to be perfect. Another area that should fit you just right is the financing. (So many decisions to make!) Be sure you know all your financing options including how a bridge loan works.
Often a certain loan can help you land the home you want—when you want it—without any type of contingency in place. For instance, Newburyport Bank offers something called a bridge loan for home purchase (aka contingency buster). As a lender who serves this community (including many friends, families and neighbors), I’m always reminding my clients that the journey to your new home doesn’t need a contingency.
What is a bridge loan?
Our bridge loan program allows a potential home buyer to use the equity in their current home as down payment toward the new home, without it being sold first. Since Newburyport Bank is a community bank, we’re really focused on serving the needs of homeowners who live right here in our communities. And a bridge loan has proven to be extremely useful.
Bridge loan financing is a transitory loan (meaning it’s temporary) that eliminates the need to present an offer on a new home with a contingency to sell your current house. Think of it as a bridge gap loan or short-term loan. It creates so many possibilities for homeowners who want to buy a home without the worry of having to sell their current house first.
Since our bridge loan eliminates the need to present an offer with a contingency to sell a current home, you have a better chance of getting your offer accepted—and the appropriate financing to support your new adventure.
With bridge loan financing, you:
- Can present an offer without a contingency to sell current home
- Can use the equity in your current home as down payment toward your new home, without it first being sold
- Can qualify for a higher purchase price on the new home since no payment on the current home is used in qualifying; only the proposed new home payment is used in qualifying
- Can avoid maxing out a mortgage on a current home by taking out a HELOC to purchase a new home
- Can get a free recalculation of the principal and interest payment on the new home mortgage if you choose to use the additional equity realized from the sale of the old home to lower the payment; this removes the need and expense of refinancing
Buying a new home is like going on an exciting adventure! You don’t want anything to get in the way of achieving your homeownership dreams. As a lender who loves to support and guide people on this exciting journey, I don’t want anything to get in the way of your dreams, either.