How to Buy Before You Sell With a Bridge Loan

Written by American Pacific Mortgage | July 23, 2018 at 6:00 PM

It’s that time. Your current home isn’t working for your family anymore and you’re ready to make the move to buy your next home. But maybe you’re nervous about trying to sell your current home while buying your new home. Do you sell first, then buy? Or buy first, then sell? No need to worry - APM can help you through the process with our Bridge Loan programs!

Why Make the Move to a New Home?

Though the average time lived in a home is now over 10 years, first-time home buyers usually move out sooner. There are many reasons why people decide to move into a new home. Does one of these descriptions fit your situation?

Your first home was a starter home, not meant to live in long-term
Your family is growing and you need a bigger home
Family members have moved out and you’re ready to downsize
You got a new job and need to move closer to your work location
You want to move into a more desirable neighborhood
You want to move into a better school district
You need a yard, bigger yard, or no yard to better meet your needs
You’re ready to sell an investment property and buy your next home to live in

Whatever your reason for wanting your next home, now you have to decide how to go about selling your current home and buying a new home.

How Do You Handle Buying/Selling Homes at the Same Time?

When you are buying your next home, you may wonder whether you should buy first and then sell or sell first and then buy. You’ve probably heard that in order to have a stronger purchase offer, you should remove the sales contingency. But the thought of carrying two mortgages if you buy first and then begin the sales process may sound scary.

APM’s Bridge Loan programs can help you purchase a new home before your existing home is sold, allowing you to make a purchase offer without a sales contingency. We have three programs to choose from:

Close WIth Confidence Bridge Loan

This loan program is designed for borrowers who are in contract for the sale of their existing property, and want to make an offer on another property without a sales contingency. Under this program, you can take the equity from your current home (that is a pending sale) and use the funds to purchase a new home.

Close WIth Confidence Bridge Loan - Expanded Access

This loan program is designed for borrowers who do not yet have a sale or lease contract on their existing home. Provided the borrower has 20% equity in the home, the borrower can exclude their departing residence payment from their debt-to-income (DTI) calculation when qualifying for the new home purchase.

Debt Inclusive Bridge Loan

This loan program is designed for borrowers who want to take equity from their current home that is listed for sale and use the funds to purchase another home. All of the debts for the departing residence including any payments on the bridge loan (if any are required) are factored into the borrower’s total DTI when purchasing the new home.

Qualifications:

	Close With Confidence	Expanded Access	Debt Inclusive
Departing Residence	Pending sale	Borrower has 20% equity in the home, but does not have a sale or lease contract	Signed listing agreement
Bridge Loan Amount	Up to $400K	Up to $400K	Up to $400K
Loan Term	6 months*	6 months*	6 months*
Minimum FICO Credit Score	680	680	680
Max CLTV	80%	80%	70%
Max Debt to Income	DTI ratios based on max allowed by purchase transaction, but not to exceed 50% Can exclude departing house payments if pending sale requirements are met	DTI ratios based on max allowed by purchase transaction, but not to exceed 50% Can exclude departing house payments if 20% equity and appraisal requirements are met	DTI ratios based on max allowed by purchase transaction, but not to exceed 50%

*Please visit our Disclosures page for more details for all loan types.

Now that you know a Bridge Loan may help in your situation, what’s next?

Prepare For Buying Your New Home

While you’re working with an APM loan advisor to help you apply for a Bridge Loan, you can begin the next steps of your buy/sell process:

Set aside enough money for an earnest-money deposit and closing costs
Get your current home decluttered, cleaned, refreshed, and staged for selling
Make decisions on what you want for your next home - location, features, etc.
Start your home search with a knowledgeable realtor

Preparing to buy your next home is an exciting step in your homeownership journey and we’re happy to help make that process a little less stressful with our Bridge Loan programs. Our friendly and helpful loan advisors are ready to work by your side to help get you to the finish line. Get a quote today and let’s get started!

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