Between 2017 and 2018, I represented four separate clients who needed to buy new homes before they could move out, stage, and sell their existing homes. It’s an order of operation that often creates complications, and the bridge loan was created specifically to ease the inherent complexity. If you’re planning to buy, then sell in San Francisco, you should understand more about how the bridge loan works.
What’s a Bridge Loan?
A bridge loan is aptly titled — it’s a short-term loan that taps the equity of a current home so that you’re in a position to make an offer and purchase a new home before you sell your existing home. The benefits can be enormous in terms of time and stress alleviated.
A bridge loan is ideal for your situation if any of this sounds familiar:
- All of your money is tied up in your existing home — In other words, you need the equity from where you’re currently living to buy something new. The bridge loan can help with that transition by securing the funding you need for a down payment or initial mortgage payments. After your existing home sells, proceeds are used to pay off the bridge loan.
- You only want to move once — A baby on the way, a new job, whatever the reason for your timeline, it’s a reality. A bridge loan gives you the breathing room you need to search for and find your new home, without feeling forced to make a rushed decision on the purchase side.
- Your home needs updates or renovations before you can sell — Even the most conscientious of owners will benefit from an interior paint job, cleaning the carpets and general decluttering. Add to that the reality that how we stage, photograph and sell homes rarely matches how sellers actually live in them on a day to day basis — and let’s not even talk about what it takes to keep your home in a museum-quality state for short notice showings. Moving out prior to selling allows us to bring your home up to speed either through minor or major work to show it in its best light. The truth is, that requires actually moving out 90% of the time.
How Does a Bridge Loan Work?
Compass recently launched Compass Bridge Loan Services, which I could not be more excited about. For more information about how these loans work, and more to the point, how one would work for your situation, contact me today.