How to unlock home net worth before selling

Buying a new home while trying to sell your current home may feel impossible, especially in New York City where inventory is tight, steep prices and timing issues.

You might be curious if there is a way to get a down payment for the home equity before you sell it, or your only option is to temporarily move out and crash while you are doing a house hunt.

Bridge loans can be the part that helps everything get together.

This short-term loan is designed to help you buy your next home before selling your current home. In this guide, we will break down how bridge loans work in New York and when to use bridges.

What is a simple bridge loan?

Bridge Loan is a short-term loan that helps you buy a new home before your current home is sold. It “blinks” the gap between the two deals by leveraging equity in existing homes to free up cash.

With Bridge Loans, you can use these funds to pay for your down payment, relocation costs, or closing expenses without having to rush to sell first. This may be especially useful in fast-growing markets like New York City, where timing is everything.

Bridge loans usually have higher interest rates and fees than traditional financing, but they are built for the speed and flexibility in your moving phase.

How does bridge loans work in New York City?

A common situation in New York City where you may need a bridge loan is that you found the home you purchased correctly but have not sold your current loan yet. In this case, the Bridge Loan allows you to use equity in your existing home to pay for the down payment and closure fees for a new property.

In many cases, the same lender who offers a new mortgage can also offer a bridge loan. They will usually require your current home to be actively sold, with loan term usually ranging from six months to one year.

Your lender will also evaluate your debt-to-income ratio or DTI. This means they may consider payments for your current mortgage, new mortgage and interest-only payments. In some cases, if your current home is contracted and your buyer has received final loan approval, the lender can only calculate your new mortgage.

Ultimately, the goal is to make sure that if your old home is not sold immediately, you can manage the payment.

What are the benefits of bridge loans in New York City?

Borrowing bridge loans can bring benefits, such as positioning you as a more flexible home buyer in New York City.

• You can offer non-requisition offers in your new home.
• You only need to move once to avoid temporary housing between sales and purchases.
• You can prepare an old house for display, cleaning and performance after moving out.
• Some lenders do not require monthly payments until your old home is sold.
• You can take action quickly on your new list without waiting for your home to close.

What are the disadvantages of bridge loans?

While bridge loans can improve your flexibility and ease transitions between homes, there are still some key drawbacks to consider.

• Additional loan costs (such as origin, underwriting and administrative expenses) may add up.
• If your old home isn’t selling quickly, you may face pressure to pay multiple times.
• Qualification can be more challenging than traditional mortgages, especially with regard to stricter equity and income requirements.
• The underwriting process may take longer than expected, delaying your financing schedule.

When is a bridge a good solution?

Bridge loans are not a blanket solution for all real estate transactions, but it can relieve the pressure of transition between old and new homes.

Some examples of when a bridge loan may be a suitable solution include:

• You need to make a down payment interest from a new home in your current home.
• You can’t afford the double action and temporary housing, or it’s crucial to bridge the sale and purchase schedule.
• Your Dream Home can only be put on the market, and you want to take action immediately to bypass competitive delays.
• The unexpected event of your offer for home sale has been a disruptive deal and you need a right to buy it right now.
• You want to sell an empty house or a staged house but can’t prepare properly or show your current place while still living.