Selling your old home while looking for a new one in Dallas can be difficult, especially when juggling the complex timing and limited finances.
However, there’s a solution that you may not have considered: a bridge loan. A bridge loan is a short-term financial tool designed to “bridge the gap,” enabling you to purchase a new home before you’ve sold your current residence.
Yes, You Can Buy Before You Sell. Why Move Twice?
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
DISCLAIMER: As a friendly reminder, this post is intended for educational purposes, not financial advice. If you need assistance navigating the use of a bridge loan in Dallas, HomeLight encourages you to reach out to your own advisor.
What is a bridge loan, in simple words?
A bridge loan is a short-term loan crafted to assist you during the delicate period of purchasing a new home while you sell your existing one. Bridge loans rely on equity in your current home. This equity is utilized to provide the necessary funds for a down payment and to cover closing costs on your new property.
Though they generally come with higher costs than traditional mortgages, bridge loans offer speed and convenience in exchange for a more expensive rate.
How does a bridge loan work in Dallas?
A typical situation where you might consider a bridge loan is when you’re eager to secure your new dream home before your current one has found a buyer. This is where the equity from your old home plays a crucial role, helping to cover the down payment and closing costs for your new purchase.
The same lender handling your new mortgage in Dallas will often manage your bridge loan. They usually require that your existing home be actively listed for sale, offering the bridge loan for six months up to a year.
One important factor that lenders will factor in is your debt-to-income ratio (DTI). This calculation considers the payments on your current home, the mortgage for your new home, and any interest-only payments on the bridge loan. However, if your old home is already under contract with a buyer who has secured their loan, your lender might only factor in your new home’s mortgage.
This is so the lender can ensure that you can comfortably handle the payments for both properties, providing a safety net in case your current home doesn’t sell immediately.
What are the benefits of a bridge loan in Dallas?
Bridge loans offer several advantages that can make your home-buying experience in Dallas less stressful.
