How Do Bridge Loans Work?

You already own a house, but one day you hear that the house you have desired for years is on the market. Out of curiosity, you call your favorite Realtor and arrange to see if the inside of your dream house is as terrific as the outside, and--suddenly you are in love. The sellers need a relatively fast settlement, and are not in a position to accept an offer that is contingent on selling your home before closing on the new one. While you are confident your house will sell fairly quickly, you can never be sure in a fluctuating market.

A bridge loan may be the answer to your situation. Many lenders specialize in providing short term loans for just this type of situation. The principal and interest is paid back when you close the sale of your present house. If the market in your area is strong and there is a good possibility of selling your home quickly, or if you are willing to offer your home at a price that will move it in a sluggish market, then a bridge loan is a tool that could make the home you love a real possibility. A good Realtor and a knowledgeable loan officer are the team you need to turn this kind of possibility into your future