architectural-house-slanted-roof BUYING BEFORE SELLING CURRENT HOME

We frequently have borrowers who want to buy a new home before selling their current home.

They are afraid if they sell first they will end up either homeless or under undue pressure to buy a home they don’t really like.

These people invariably ask about bridge loans (temporary cash out financing to provide funds for a down payment towards a new home).

Yesterday was case in point: a woman with a $2 million home wanted to downsize to a $1 million home. She currently owes $480,000, and she has ample income.

She does not, however, have a lot of liquidity (other than a $100,000 equity line), so she asked about bridge loans.


The simplest and cheapest solution for her is to increase her equity line limit to $300,000, giving her more than enough for a substantial down payment and a 14 day close.

And this is almost always the case for borrowers looking to buy before they sell.

Bridge loans are sometimes the best option, but they require substantial equity, they are more difficult to qualify for, and they are far more expensive.

They also make it harder to qualify for new home financing b/c they usually preclude the use of future rental income from the current house (for qualifying purposes).

Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646

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