How is it possible for me to sell my home and buy another if the deals close at different times?
This is not an unusual problem. Here is a typical scenario:
You've found the house you want. The price is right, and you want to move on it now.
Two problems stand in your way. First, other buyers are interested in the home you want, which means it won't be available very long.
Second, though you have plenty of equity in your present home, it's not available to you for the down payment. Your home has to sell before you can get the new one.
But maybe not.
If the new home is your priority, a bridge loan could make it happen. It's a temporary loan on your original home that bridges the gap between the amount of the new home mortgage and the selling price. The amount would be your down payment. When your present home is sold, the bridge loan is paid off.
Most lenders don't have guidelines about credit scores or debt-to-income ratios for granting a bridge loan. It's more of a "makes sense" underwriting approach.
Some mortgage lenders don't consider the bridge loan payment when creating the new mortgage. But they do consider whether you can pay the mortgages on both houses until one is sold.
The bridge loan will get you into the home you need, but there will be loan origination fees. Most bridges, however, do not have a monthly payment for several months.
Another bridge advantage: The loan does not restrict sale of the previous home in any way.
The bridge loan is especially helpful for someone moving to another town to take a job. It works equally well for anyone who has found a great deal on another home and wants to take advantage of it before someone else does or before tax rebate offers expire.