Home Equity Loan instead of Bridge Loans
(Updated November 2014)
Traditional bridge loans are appropriately named, because they are designed to help people bridge the financial gap between one home and another. For example, if you buy a new home before selling your old one, you can borrow money with a bridge loan to help cover such things as dual mortgage payments, the down payment on your new home, closing costs, moving expenses, and broker fees.
Unfortunately, bridge loans for purchasing residential real estate are just about nonexistent these days. Such loans aren't that profitable for lenders to begin with and in the more conservative lending environment following the 2008 market crash, there just isn't much interest in doing them. The ones that are made are pretty much limited to borrowers who have a great deal of equity in their old home and substantial financial reserves besides.
Besides, interest rates and repayment installments on bridge loans aren't cheap, even when you can find them, and can hit you deep in your pocket just when you're trying to conserve money.
So what to do? One less costly and more readily available alternative to a bridge loan is to use a goes through, you can sock away the cash, and put your house on the market.
If your house sells within a month or two, you may need to make only one small payment before it closes. At closing you'll pay off the home equity loan and be done with it. Essentially, you will have crossed the bridge before you even got to it.
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