[Bridge Loans]
Bridge Loans can help tide you over if you buy a new home before your old one is sold. Bridge loans, also referred to as equity or gap loans, tap the equity in a current home to provide the down payment on a new home. During the 'gap' period, you normally pay only the interest that accrues on your former home. Buyers repay the loan after the home has sold or at the end of the term, whichever comes first.
ADVANTAGES OF BRIDGE LOANS
- Keeps you from missing out on a buying opportunity when you find your next home.
- No need to wait until the sale of your current home is closed to get the down payment for the home you want.
- No worry about coordinating the closing on your new and current homes.
DISADVANTAGES OF BRIDGE LOANS
- If your house doesn't sell, you could end up paying two mortgages.
- Since it is treated more like a short-term personal loan, a bridge loan will have higher interest rates.
