Bridge loans are a popular financing strategy in Seattle, Washington right now. They are used by homeowners who are selling one home and buying a new one, within a fairly short time frame. This type of mortgage “bridges the gap” between selling a home and buying a new home, hence the term.
Is a bridge loan right for your purchasing situation? That will depend on your timeline, your financing needs, and your real estate goals. Contact us if you have any questions about this financing strategy, or learn more below.
Here’s what you should know about using bridge loans in Seattle, Washington.
Using Bridge Loans in Seattle, Washington
A bridge loan is a short-term home loan used by homeowners who want to purchase another home before selling their current one (in most cases). Stated differently, it allows you to close on a new home purchase before closing the sale of your existing home. It bridges the gap, financially speaking.
In Seattle, Washington, bridge loans can also be referred to as swing loans or gap financing. Interim financing is another common name for them. With all of these descriptions, the general idea is the same. The bridge loan is being used as a financing tool to bridge the gap, or interim, between buying another home and selling your current one.
Seattle bridge loans can vary quite a bit in terms of the structure. They are usually taken out for a few months up to a year, but they can be longer or shorter than this. After taking out the bridge loan, the borrower will attempt to purchase another home while actively selling their current one. In many cases, the bridge loan is paid back from the proceeds earned from the sale of the home.
How Sammamish Mortgage Does It
Sammamish Mortgage offers a unique and effective version of the bridge loan, which is ideally suited to the competitive real estate market in Seattle, Washington.
With this option, move-up home buyers can purchase a new house without having to sell the current residence until after closing. This allows you to purchase the new home without adding any contingencies into the contract (regarding the sale of your current residence). In a fast-moving real estate market like Seattle, purchase-offer contingencies could work against you. That’s why we offer this form of bridge loan financing.
Highlights of our Seattle, Washington bridge loans:
- This is not a second mortgage or HELOC. The Sammamish Mortgage bridge loan is a short-term first lien on the new house you are buying.
- Flexible debt ratios. Unlike a typical bridge loan, which factors in both the current and new mortgage for debt-to-income ratio calculations, ours only uses the new mortgage. This dramatically increases your financing reach.
- Our bridge loan allows you to make a “clean” offer on the new house, without having to include a contingency for the sale of your current home. This is a big advantage in a real estate market like Seattle, where too many contingencies can be a turn-off for sellers.
- You’ll have an easier transition from one residence to the next, without having to move into a short-term rental while you search for your new home and wait for it to close.
- Once your new purchase closes, we will begin setting up your permanent financing. When your previous property sells, we will then finalize the refinance into a long-term conventional mortgage.
Bridge loans aren’t right for every buying-and-selling scenario. But in many cases, they can be the exact right solution for homeowners who need to bridge the gap between buying a new home and selling the old one.