:: Bridge Loan Financing

These are a few options when considering using the equity from your current residence as a down payment for your new home. Please contact one of our Mortgage Professionals to find out which is best for you.

Bridge Loan:

A “Bridge Loan” allows a borrower to use the equity in their existing primary residence to close on the purchase of a new primary residence before the closing of the existing home. The Bridge Loan will be secured by a new second mortgage on the existing primary residence. The maximum amount of any bridge loan is limited to 90% of the listing price for the current primary residence.

We will require that the current primary residence be listed for sale in order to be eligible for the loan. The bridge loan has a 6 month term.

There are no monthly principal and interest payments required during the loan. When you pay the loan amount back, you will pay the loan amount plus any accrued interest.

The interest rate on the bridge is usually prime plus 1.

Assume, for example, that you are approved for a bridge loan for $50,000 and prime is 6.5%. Your interest rate would then be 7.5% and your daily payment would equal $10.27 per day. In this scenario you would have to pay back $205.48 if you had the bridge for 20 days. (20 x 10.27 = 205.48)

Purchase Assistance Line:

A Purchase Assistance Line or PAL is used in place of a bridge loan. You are required to put 5% of your own funds into the purchase. We then try to calculate the equity you will receive when you close on the sale of your existing primary residence.

We will require you to have an accepted offer to purchase on you current primary residence.

There will be monthly interest payments. The payment will be based on prime multiplied by the outstanding balance. A $50,000 line at 6.5% interest would have a daily interest of $8.90. A full month’s interest would equal $267.12.

These are a few options when considering using the equity from your current residence as a down payment for your new home. Please contact one of our Mortgage Professionals to find out which is best for you.

Requirements:

Both of these programs require that the properties are single family residences.

Both require your current residence either have an accepted offer or be listed for sale.

Again, please contact one of our Mortgage Professionals to make sure you qualify.