May Hughes

Bridge Financing: Is it Worth it? Absolutely! Bridge Financing will allow you to borrow your down payment to buy your dream home before your current home sells. What is Bridge Financing? The Lender who approves your Mortgage can arrange to lend you the down payment for the new home so that you dont have to wait for the current property to close first. Usually people use the equity from the sale of their property as down payment for the new home. When the closing of the new home purchased and the sale of your current home do not match up, bridge financing can be arranged to loan you the money for your down payment on the new home. Bridge Financing is a short term loan for your down payment. Bridge Financing can get costly, so the shorter the term, the better. How much does it Cost? Cost associated will include Legal and Lender Fees (Check with Lender to learn about fees) in addition to the rate of interest charged for the duration of loan. Rates charged are usually prime + (Lenders approved Rate ? 3%-4%) based on Loan Duration. Simplified Calculation will be: Loan Amount * rate / 365 * # of days required for bridge loan (add a few days to allow for approx. cost). The Good News! The good news is the rest of the approved Mortgage will be charged the lower rate for the agreed upon amortization and term. Usually Bridge Loan costs less than $1000 up to $2000 unless there is some unique circumstance where property does not sell as planned.