Understanding Bridge Loans
A bridge loan is a short-term financing solution that "bridges" the gap between buying a new home and selling your existing one.
We offer a BRIDGE LOAN that allows you to leverage the equity in your current home for a down payment on a new home, cash-to-close, and debt consolidation1.
Understanding Bridge Loan Qualifications
Applying for a bridge loan works similar to applying for a conventional mortgage. While your home equity is a key factor, Bridge loans, like all home financing options, require borrowers to meet certain qualifications. We will review your income, assets, and credit history. You shouldn’t assume automatic approval based on equity alone. We encourage you to contact us to discuss your specific situation and see if a bridge loan is right for you.
Overview of Our Bridge Loan product
- Loans up to $1 million; no minimum loan amount
- Properties Eligible: Primary residence, detached or attached planned unit development (PUD), and warrantable condominiums
- Cash-Out Refinance allowed on first mortgage to:
- Pay off outstanding liens on current property
- Pay off debt
- Take equity out to purchase a new primary residence
- Bridge loan terms: 12 months2
- Borrow up to 80% of your home’s value when listed for sale and 89.99% when under contract. (Up to 80% for California properties)
Advantages of a Bridge Loan
- Increased Buying Power: Secure a new home without the need to sell your current one first.
- Debt Consolidation & Qualification: Use your equity to pay off or pay down existing debt, improving your debt-to-income ratio and potentially helping you qualify for a new home mortgage.
- Maximize Your Home's Value: Take the time to get top dollar for your current home and avoid accepting lower offers.
- Simplified Finances: Move into your new home and only carry one mortgage until your existing home sells.
Key Considerations Before Securing a Bridge Loan
Qualification is Required3. Even with substantial equity, we must assess your overall financial picture, including income, assets, and credit, to determine eligibility for a bridge loan.
When contemplating any type of financing, thorough research is essential to fully understand the specifics of the loan and the lender's expectations. Two critical aspects of a bridge loan to evaluate are the initial costs—like closing expenses—and the protections available to you if your home sale does not go as planned.
Initial Costs Similar to conventional mortgages, bridge loans come with closing costs and origination fees that can amount to several thousand dollars. Additionally, you may need to cover the expense of an appraisal.
If you’re ready to explore any bridge loan alternatives, start an application for a home loan with Florida Capital Bank to see what you qualify. Or contact us today for a personalized consultation.
Debt Consolidation Information: The amount you save on debt consolidation may vary by loan. Since a home loan or cash-out refinance may have a longer term than some of the bills you may be consolidating, you may not realize a savings over the entire term of your new loan. In addition, your new loan may require you to incur increased premiums, as applicable, for mortgage insurance, hazard and flood insurance, which would affect your monthly payment reduction. Certain types of federal loans, including federally guaranteed student loans, come with benefits that may be impacted if you consolidate.
12 months term: Interest only monthly payments with a balloon payment at the time of sale or maturity of the outstanding principal balance plus all accrued and unpaid interest at the end of the loan period based on prime plus one percent.
Bridge loans require qualification. While your home equity is a significant factor, we also consider your income, assets, and credit history to ensure responsible lending. Don't assume you automatically qualify just because you have equity. A preapproval is based on a review of income and asset information you provide, your credit report and an automated underwriting system review. The issuance of a preapproval letter is not a loan commitment or a guarantee for loan approval. We may offer a loan commitment after you submit an application and we perform a final underwriting review, including verification of any information provided, property valuation and, if applicable, investor approval, which may result in a change to the terms of your preapproval. Preapprovals are not available on all products and may expire after 90 days. Contact a Home Lending Advisor for details.