ABA Family Legal Guide

Buying and Selling a Home

Financing a Home Purchase

Applying for a Loan

I want to buy another home, but I have not sold my present home yet. Is there a way to finance until I can sell?

Many lenders offer a bridge loan to allow a buyer to close on another home while waiting to sell his or her present home. You can usually obtain a bridge loan if you have a contract to sell your present home and you need the loan only for a specific, relatively short, period of time. It is much more difficult to obtain a bridge loan if you do not have a buyer for your home and, thus, need to pay loans on two properties for an indefinite period of time. A bridge loan usually carries a higher rate of interest than a traditional home loan.

It may also be possible to use the equity on your current home to provide the additional money to purchase a second home. The owner would need to obtain a home equity line of credit on the current home. The owner can then draw upon the line at the time of the second purchase. The line of credit would then be paid off at the time of the sale of the current property. Home equity lines of credit are generally interest-only loans.