In the current post-pandemic housing market, the scarcity of available homes is a pressing issue. In a balanced market, one that favors neither buyers nor sellers, move-up buyers can typically time transactions so that they sell one property and then close on their new house within a few days or weeks.
However, the present situation is characterized by a persistently tight market. According to the National Association of Realtors, as of February 2024, the supply of homes for sale in the U.S. was a 2.9-month inventory, reaffirming we are still in a seller’s market. Complicating matters further, many American homeowners find themselves in a situation where they possess substantial equity in their homes but lack liquid assets. This financial reality poses a significant obstacle to homeowners hoping to relocate to a new property.
In response to these challenges, bridge loans emerge as a financial solution.
What Is A Bridge Loan?
A bridge loan is a type of short-term financing that gives a borrower cash to buy a home before they’ve sold another home. In financial terms, a bridge loan provides immediate cash flow while the borrower waits for a liquidity event in the near future.
When To Use A Bridge Loan?
Here are some scenarios where a bridge loan can help get the deal done:
- A buyer can’t afford a down payment on a new property without first selling the current home: This is a typical situation for homeowners. They’ve been paying the mortgage and keeping up with their credit cards, so their credit scores are stellar. But coming up with 20% for a down payment is a challenge, even for financially stable borrowers. In regions where home prices are near the national median, coming up with 20% down means writing a check for $80,000 or more. In expensive markets, or for luxury homes, a buyer might need to put $200,000 or more down. Even creditworthy buyers rarely have that much cash on hand.
- A client wants to close on a new home before selling the current home: Timing a purchase and a sale is tricky. Many buyers rent an apartment, stay in a hotel, or move in with family for a few weeks or months. To avoid that inconvenience, many borrowers are looking for the flexibility to carry two homes for a month or two. By letting a borrower close on their next home before selling their old home, LendSure’s BOOST program makes that possible.
- The client is battling in a fast-moving market: The housing market has normalized in many parts of the country, but there are still neighborhoods or property types where homes sell quickly. A bridge loan makes sense if your client wants to purchase a property but the seller won’t accept an offer contingent on the sale of the borrower’s current home. LendSure’s BOOST Loan Program removes that contingency and helps your client move swiftly and win the deal.
LendSure offers BOOST, a unique bridge loan program to help equity-rich homeowners. BOOST empowers borrowers to access equity from their current home to purchase a new home. BOOST pays off the existing lien, with no monthly payments on the Bridge loan, AND without affecting the DTI on the new home purchase. Additionally, borrowers can gain a competitive advantage in a hot housing market by making a non-contingent offer on the new property.
Are you ready to benefit from a commonsense approach to lending? Contact us today to learn more about our BOOST program and how partnering with LendSure Mortgage Corp. can help grow your bottom line.
The LendSure Way
It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers ratios, and data to consider, but we know that behind every file, there’s an individual with a unique circumstance seeking a loan. We work hard to offer our common-sense take on lending to borrowers seeking funding for the home of their dreams, another addition to their investment property portfolio, or refinancing of a currently-owned property.
