How Do Bridge Loans for Home Mortgages Work?
Bridge loans help home buyers get into a new home while they’re still selling their old one.
There are two types of bridge loans for home mortgages. In the first, you borrow the money needed to pay off the mortgage on your old home plus provide a down payment for your new one. In the second, you keep your old mortgage and borrow against the equity you ve built up in your old home. That equity is then used to provide a down payment for the new home.
In the first type of loan, you don t usually make any monthly payments. Instead, you make payments on your new home. When your old one sells, you pay off the loan s principal balance and any accrued interest from sale proceeds. The second type of loan is really a home equity line of credit, or HELOC. You ll pay off the HELOC and your old mortgage when you finally sell your old home.
Bridge Loan Costs
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