How to buy before selling

Selling your current home while trying to buy a new home is a common dilemma for homeowners in Georgia. Imagine: You finally found an ideal place to call home, but your own house has not been sold yet, leaving you in trouble.

Homeowners often dream of the perfect time to close, selling their old place just a few days before moving into a new one, so they can avoid relocating twice and renting for a while. Trying to synchronize these schedules can be a real headache, turning what is called exciting milestones into stressful balancing behavior. Fortunately, there is a solution to the difficulty: Bridge loans.

As a short-term financing option, Bridge Loans offer the unique advantage of helping you buy a new home before selling an old home. This innovative solution may just be the work you lack in your home buying and selling challenges. In this post, we will provide tips and insights on Georgia Bridge Loans and buying before sale.

Disclaimer: As a friendly reminder, this article is intended for educational purposes, not financial advice. If you need help with using bridge loans in Georgia, Homelight will encourage you to contact your own consultant.

What is a bridge loan?

Bridge loans are a lifeline as you transition from your current home to your next home. Essentially, it’s a short-term loan that provides you with the necessary funds to secure a new property before the existing home is sold. This type of loan takes advantage of your current home interest, giving you financial flexibility to make a down payment and process the closing costs of new purchases.

Think of bridge loans as your financial stepping stone. It can “bridge” the often tricky gap between selling your old home and acquiring a new home.

Typically, the structure of a bridge loan lasts from six months to one year, although the exact duration may vary based on your unique financial situation and the lender’s specific policies. Due to its temporary nature and inherent risks involved, bridge loans usually have higher interest rates than traditional mortgages.

How does bridge loans work in Georgia?

In Georgia, you might think the typical case of a bridge loan is that you are eager to snap up new dreams before your current buyer finds a buyer. In this case, your equity in your existing home serves as a financial springboard for you covering down payments and settlement fees for your new home.

Often, the same lender on the new mortgage you work with will also promote your bridge loan. They usually require that your current home is already on the market and offer a phase of bridge loan ranging from six months to one year.

The key aspect that your lender will evaluate is your debt-income ratio (DTI). This calculation takes into account the mortgage loan for your old and new homes, as well as the interest-only payment for your bridge loan, if applicable.

However, if your current home is already in a contract and a potential buyer has received a loan, your lender may only consider a mortgage on a new Georgia home in the DTI equation.

What are the benefits of bridge loans in Georgia?

Bridge loans in Georgia have a variety of advantages that can make your home purchase experience smoother and more flexible: