Many people wonder: is it possible to sell and buy a Charlotte, NC home simultaneously?
Homeowners can buy and sell property at the same time through bridge financing. With this, a prospective buyer can make an offer - even if the current home is yet to be sold.
Learn more about this financing option - plus other helpful selling and buying tips - below.
Selling and Buying a Charlotte, NC Home With Bridge Financing
Picture this: you’ve finally found your dream house and a buyer for your old one. Everything’s going fine, up until your buyer backs out at the last minute.
Sadly, your Charlotte, NC real estate agent has multiple offers for the home of your dreams. They have no other choice but to give it to the next client.
Thanks to bridge financing, you can get your dream home - even if you haven’t sold your old one.
What Is Bridge Financing and How Does It Work?
Bridge financing is a type of short-term loan that is good for at least a year. It provides immediate cash flow to meet your current obligations - a new home, in this case.
In simpler terms, a bridge loan allows you to make an offer - even if you haven’t sold your current property yet.
Bridge loans are getting more and more popular nowadays due to:
As with most loans, bridge financing comes with interest. You also need to provide collateral, which is often the home you’re selling.
Once you secure a long-time financing plan, you can use this to pay your bridge loan.
What Are the Benefits of a Bridge Loan?
Here are five reasons why you should get bridge financing for your Charlotte NC home:
1. You Don’t Have to Sell Your Home Immediately (or for a Lower Price)
Some homeowners become desperate to make an offer for a new home. As such, they feel forced to sell their home at a lower price than they’d like.
With bridge loans, you don’t have to hurry at all.
This means you’ll have more time to work with Showcase Realty agents with regard to selling your home. That way, you get the best price possible.
2. Bigger Down Payment = Lower Mortgage
With the help of a bridge loan, you can make a more substantial down payment. In effect, you get to enjoy lower mortgage rates.
3. It Allows You to Make an ‘Attractive’ Non-Contingent Offer
In real estate, contingency is a criterion that has to be met before the sale is finalized. You can compare it to a clause in a certain agreement.
A contingent often comes from the buyer, but the seller can set contingencies too.
With a bridge loan, you can make a non-contingent offer. Because there are no ‘ifs and buts,’ sellers find this deal more attractive.
4. You Only Need to Make Interest-Only Payments
In most cases, lenders will only ask for interest-only payments - up until you sell your house.
5. You Can Move Into Your New Home Right Away
With a bridge loan, you don’t have to be ‘in-between homes’ while you sell and buy a home. You won’t have to pay for storage or rent a temporary place to stay. You can move into your Charlotte, NC home right away!
What Are the Disadvantages of a Bridge Loan?
As with most loans, bridge financing comes with some setbacks.
1. You Need to Qualify for a Bridge Loan
Like any other loan, lenders will look at several factors before they give you one. I’ll discuss the details below.
2. Higher Interest Rates
Taking a bridge loan means paying a higher interest - somewhere in between 8.5% and 10%.
3. You Need to Pay for Two Mortgages
You have to finance the mortgage of your new home - as well as the previous one.
4. Risk of Foreclosure
Since your present home is your collateral, you may run a higher risk of foreclosure.
5. Fewer Protections
Compared to other loans, bridge loans don’t come with federal protections.
Where Do I Get a Bridge Loan?
If you’re looking to get a bridge loan, you can get one from banks. Smaller lenders offer bridge loans as well.
For best results, consult with a top Charlotte NC real estate agent first to get a bridge loan. They can refer you to experienced bridge loan lenders. You may get some discount or deal from this referral, too.
What Are the Requirements for a Bridge Loan?
Lenders will look at these four things before they approve your application.
How Much Can You Borrow on a Bridge Loan?
The maximum amount you can get is 80%. It’s based on the combined value of the home you want to buy - and the one you are selling.
How Long Does It Take to Get a Bridge Loan?
You can get a bridge loan in about five to ten days.
Lenders who have lower rates usually take longer at 10-14 days. That’s because they are often more stringent with the applications.
Because of this fast processing time, bridge financing can help you close a home right away.
Is There an Alternative to a Bridging Loan?
While a bridge loan is a fast way to sell and buy a home, you have other options.
Home Equity Line of Credit
Also known as HELOC, this credit line is based on the equity percentage of your property. With this, you may get enough money to pay for the down payment.
Similar to a bridge loan, this uses your home as collateral.
Home Equity Loan
Again, this is based on the equity percentage of your property. Compared to a bridge loan, you need to repay the lump sum right away.
This involves a refinancing of your current home. You can use this money to make a down payment, though you will still need to pay your present mortgage.
8-10-10 Piggyback Loan
This is a loan you can take for your new home. With this, you can pay 10% of the required amount.
Bridge financing is a short-term loan that can help you sell and buy a home in Charlotte, NC. With a bridge loan, you don’t have to be in a hurry to sell your current home at a lower price. More importantly, this loan allows you to move into your new property immediately.
If you’re looking for a bridging loan, it’s best to ask your Charlotte, NC real estate agent. They can give you referrals to accredited lenders.
In addition, get a free report on how to avoid the real estate catch-22 of getting stuck with two homes - CLICK HERE.
Nancy Braun and her home selling team at Showcase Realty are experts in assisting homeowners who are thinking about selling. Please call us at (704) 997-3794 for a no-obligation consultation to assist you with your real estate needs.