Interim Financing - "Bridging" the Gap
Are you selling your current home and purchasing a new home? Are you moving into your new home before the sale of your current home is complete? Is your down payment for your new home coming from your existing home?
Then bridge financing (also known as interim financing) could be for you!
What is Bridge Financing?
Bridge financing is a loan that lenders provide to mortgage borrowers when the purchase of their new home is closing before the sale of their current home. Generally, bridge financing is needed when the down payment for the new home is coming from the sale proceeds of the existing home.
Most standard mortgage lenders have a certain amount of money set aside for bridge financing, and therefore offer it to their customers that need it. You should know the dates for which you will need bridge financing (the sooner you know the dates, the better), and how much money you'll need, when you speak with your mortgage broker.
How Long Can I Have Bridge Financing For?
The maximum period of time that you are allowed to use bridge financing for varies from lender to lender, as well as their terms and conditions. Some lenders will require the registration of a second mortgage on the title of your home for sale if the bridge financing is needed for an extended period of time.
How Do I Get It?
To obtain bridge financing, you will be required to pay a minimal fee (usually around $250), and will also be required to pay interest on the bridge loan amount for the duration of the loan. Interest rates vary from lender to lender, so please speak to your mortgage broker to clarify the rates, as well as any other fees and terms that apply to your bridge financing.
Additionally, to qualify for bridge financing, the purchase of your new home and the sale of your current home must be solid, meaning that all conditions on both transactions must be removed. You will be required to provide copies of the Agreement for Purchase and Sale for both properties.
Let's Do It!
Bridge financing can be expensive, so please try to ensure that the closing of your purchase and your sale coincide.
First Foundation is happy to arrange bridge financing for any its customers. If you are in need of bridge financing, or think you will be in need of bridge financing, please let your Licensed Mortgage Associate know as soon as possible, and it will be arranged.
If you have any further questions, please Contact First Foundation today!