There is a shortage of available housing for sale in markets all across the country. One primary reason for the scarcity of homes for sale is homeowners who are unwilling to sell their current homes without being confident they can secure their next home.
Homeowners who want to sell are stuck in a holding pattern because they have been told by their bank that they must sell their existing home first to qualify for a home loan.
Homeowners are choosing to stay in their homes fear they won’t be able to compete with buyers who do not have a home sale contingency.
Selling your home first without knowing where you are moving creates anxiety in the homebuying process, exacerbated by the limited supply of homes for sale.
In today’s competitive real estate market, any contingencies in your purchase offer signal risk to a Seller, especially if the contingency is related to the sale of your current home.
Most home sellers will not accept a purchase offer there is a contingency for selling another property.
One primary reason is the home sale contingency will impact their ability to buy their next home with a chain of home sale contingencies linked to their purchase offer.
One option is to buy your next home before offering your current home for sale.
There are significant benefits of buying first and then selling.
A few private lenders offer consumer bridge loans tailored made for this multiple-offer, cash-always-wins, contingency free offer, real estate marketplace.
What’s a bridge loan?
A simple solution to bridge the gap between the home you have and the home you want.
A bridge loan is a short-term loan that uses the equity from your current home to help you make an offer on a new one, without rushing to sell.
You won’t find this loan offered by institutional or conventional lenders. In fact, only a small segment of the private lending industry offers this type of loan.
The name bridge loan is a term widely used in lending, and it mostly refers to a very different type of loan than the topic of this post.
It is often used in commercial lending to simply mean a short-term loan.
Many lenders advertise bridge loans, and almost all of them are referring to short-term commercial or investment loans – not loans for purchasing a primary residence.
A consumer bridge loan is a unique loan that requires consumer licensing and underwriting, and most private and alternative finance lenders specifically avoid them.
Does a bridge loan make sense for you?
Is your money tied up in the equity of your current home?
If you want to move but your money is tied up in the equity of your current house, a bridge loan can help you secure funding to facilitate the transition to a new home — like for a down payment or mortgage payments.
Once your current home sells, you can use the proceeds to pay the bridge loan back.
Do you need to move within a specific timeframe?
If you're relocating for a new job or other reason, a bridge loan can afford you the freedom to move on your own terms and secure a new house when you need to, without having to wait for your old home to sell.
Does your home require renovations or other work?
Whether you're using Compass Concierge to increase your home's value, or are making improvements on your own, it may be easier to have construction work done when you're out of the house.
A bridge loan can help you move faster so you're out of the house while those improvements are being completed.
One lender offering the consumer bridge loan is Pacific Private Money located in the San Francisco Bay Area.
Pacific Private Money offers a unique financing program allowing homeowners to make an offer on the home they want to buy without having to list their current house for sale.
This financing program gives homeowners the confidence they need to buy the right home and when it’s the right time to do so.
Our real estate company, Compass, provides a loan for up to 6 months of mortgage payments for the bridge loan.
How it works:
Inquire directly with a bridge loan lender to see financing options and if you qualify.
Apply to get pre-approved for a bridge loan with the lender of your choice, while searching with your Compass agent for your next home.
If approved for a bridge loan, learn more about getting the first six months of your bridge loan payments fronted via the Bridge Loan Advance by Notable, an independent lender.
If needed, use your approved bridge loan to strengthen your bid on a new home.
Move into your new home while your Compass agent works to sell your current home.
Use Compass Concierge home improvement services to sell your home faster and for more money.
When your old home sells, simply use the proceeds to pay back the bridge loan and Bridge Loan Advance.
Here are a some more ways a consumer bridge loan can be used to help purchase your primary residence:
If you are approved for the Bridge Loan Advance, it has a 0% APR for the life of the loan and has no additional application or closing fees.
What rates and fees accompany a bridge loan?
The rates and fees for each bridge loan are determined by the lender.
If you are approved for the Notable Bridge Loan Advance, it has a 0% APR for the life of the loan and has no additional application or closing fees.
What is covered by the Bridge Loan Advance?
The Bridge Loan Advance can equal up to 6 months of monthly payments and eligible closing costs incurred from the bridge loan.
Eligible closing costs include the dollar value of any points paid upfront, origination or application fees where applicable and appraisal fees.
Who is eligible for the Bridge Loan Advance?
The Bridge Loan Advance is available exclusively for qualified clients with a traditional bridge loan who are working with a Compass agent to sell their existing primary residence.
Bank and conventional financing rates are at historic lows and are expected to remain that way for years to come. Everyone that can get conventional financing should.
But bank financing is also harder to obtain today than ever before, especially for the self-employed borrowers, and these loans often take longer to close.
For those and many other common reasons, bank financing isn’t an option for many purchase situations.
A consumer bridge loan may not be the perfect solution for every situation, but it is the right option for so many situations.
Applied correctly, a consumer bridge loan can help you purchase a home that you otherwise would not be able do so in today’s real estate marketplace.
Pete Sabine & Leslie Whitney
Five Star Real Estate Team
Call or text 925.297.5335
The fine print
The Bridge Loan Advance for Compass clients is a loan provided by Notable Finance, LLC, NMLS# 1824748 and is available to all eligible Compass clients working with the Bridge Loan lender of their choice. Notable's phone number for applicants only: 833-615-0249. Loan eligibility is not guaranteed and all loans are subject to credit approval and underwriting by Notable. Loans made or arranged pursuant to a California Finance Lenders Law license. Compass is not a lender and is not providing loans as part of Compass Bridge Loan Services.
Information regarding lenders which offer short-term Bridge Loan financing is provided for informational purposes only and does not constitute an endorsement of the particular lenders referenced. Compass cannot guarantee that these institutions will be able to assist and does not assume any responsibility as to the performance of services to be provided by these institutions. There are no requirements that you participate in the Compass Bridge Loan Services or obtain a loan from these providers to participate in any other Compass programs (such as Compass Concierge). Speak to your Bridge Loan lender about all the costs you may be responsible for in connection with your Bridge Loan.