Want to Buy Before You Sell? You May Have More Options Than You Think.
A REALTOR® asked me a question this week that I hear all the time:
“Do you have any bridge financing options?”
My answer?
YES!! A number of them. 😊
And then I usually add: Tell me about the buyer.
Because “bridge financing” isn't necessarily one loan or one solution. When someone owns a home and wants to buy their next one before the current home sells, there are a lot of pieces we can potentially work with.
- How much equity is in the current home?
- Do they already have their down payment?
- Can they qualify while temporarily carrying both homes?
- Do they need access to their equity before they sell?
- Could other assets or an allowable gift help?
- Would a lower-down-payment option make sense initially?
- Could we recast the new mortgage after the old home sells?
And there are even specialized buy-before-you-sell solutions that, for qualified buyers and properties, may help address the departing home's payment in qualifying, provide access to equity, and allow the buyer to purchase and move before selling the existing home.
See why I said we have options?
It’s a Puzzle—and I LOVE the Puzzle
This is honestly one of my favorite kinds of mortgage conversations.
Someone will call and say:
“Sharla, we found the house—but we haven't sold ours. Can we do this?”
And my brain immediately starts going:
Okay...let's see.
Maybe they can qualify carrying both homes for a short period of time. Maybe they have enough equity in their current home that we can explore accessing some of it temporarily for the next purchase. Maybe they don't need to touch that equity at all because they have other allowable funds available for the down payment. Maybe putting less down on the new home initially makes sense—even if that means mortgage insurance for a short period of time. Then, once the existing home sells, the buyer may be able to apply a large portion of those proceeds to the new mortgage and, when permitted, recast the loan to lower the monthly principal-and-interest payment.
Or maybe we need one of the newer buy-before-you-sell strategies that can help solve both the equity and qualification pieces.
Plan A may work beautifully.
If it doesn't, let's look at Plan B.
And C.
And D.
And E.
You get the idea. 😊
But There Isn't One Solution for Everybody
This part matters.
Having options doesn't mean every option works for every buyer.
Income, credit, equity, assets, debt-to-income ratios, the departing property, the new property, the loan program and even the timing of the transactions can all change what's possible.
Some buyers can comfortably qualify with both housing payments.
Some can't.
Some have plenty of money for their next down payment but get hung up because carrying the existing mortgage affects qualification.
Others qualify just fine—but most of their available cash is tied up in the equity of the home they haven't sold yet.
Same problem on the surface. Completely different financing puzzle underneath.
That's why when someone asks me, “Do you have a bridge loan?” my answer isn't simply yes or no.
My answer is:
“Tell me what you're trying to accomplish.”
Sometimes the Bridge Isn't a Bridge Loan
This may be my favorite part of the whole conversation.
People often come to me thinking they need a particular mortgage product.
But what they really have is a problem they need us to solve.
They need to get from here—the home they currently own—to there—the home they want to buy.
And there may be several different ways to build that bridge.
Sometimes it involves borrowing against existing equity. Sometimes it's simply structuring the new mortgage differently. Sometimes it's coordinating the timing of the purchase and sale. Sometimes it's using other allowable assets. Sometimes it's a buy-before-you-sell solution designed specifically for this situation.
And sometimes, after we run everything, the best answer really is to sell first.
The goal isn't to force somebody across the bridge. It's to figure out whether there's a safe, sensible way to get them to the other side.
Your REALTOR® Is Part of This Strategy, Too
This is another place where I LOVE collaboration.
If we're trying to buy before selling, I want to be talking with your REALTOR®.
How quickly do they believe your current home can sell? What does the market look like? How should we structure the offer on the new property? Is a home-sale contingency necessary—or is there another financing strategy that may allow us to write without one?
The financing and the real estate strategy need to work together.
And if you don't already have a great REALTOR® helping you navigate that side of the equation, I know some fabulous ones.
Don't Assume You Have to Sell First
This is really what I want homeowners to know.
If you've been thinking about moving but keep stopping yourself because: “We can't buy until this house sells.”
Please don't assume that yet.
You may be right.
But you also may have options you haven't considered.
And that's where the fun begins for me. 😊
Bring me the house you own. Bring me the house you're considering. Bring me your equity, your income, your assets, your concerns and all the “But how would we...?” questions.
Then let's build the bridge. 🌉🏡
— SE
