In many ways, buying your second home is easier than buying the first. After all, you're familiar with the buying process. But unlike your first home purchase, when you buy your second home, two transactions must occur in order for you to move: the sale of your current home and the purchase of your new one. When the purchase closing date and the sale date don't match, the purchaser often turns to a bridge loan.

A bridge loan is a short-term, interim financing option that allows you to purchase a new home by borrowing a portion of your current home's equity for a down payment on your new home, when your current home has a closing date later than your new home. In other words, you are "bridging" the gap between your old and your new mortgage as you wait for the sale of your existing home to close.

Know that you'll need to satisfy specific conditions to qualify for this type of loan, and expect bridge loan interest rates to be higher than regular mortgage or other lending rates, since bridge loans are short-term agreements. Also be aware that some lenders charge a set-up fee, while other lenders charge early pay-off fees.

Please call today to get all the details about how a bridge loan works, and if it's something that could help make your next real estate transaction flow more smoothly.

From The Shamez Virani/Virani Team July 2016 Newsletter - Courtesy of Market Connections Inc.