Bridge Loans
If you've found the home of your dreams and you still haven't sold your old one, you might be in the market for a bridge loan so you can still borrow enough to buy the new place. Terms for bridge loans can last from ninety days to several years if necessary. Depending on one's credit rating, bridge loans can either go for the prime rate for the best-rated borrowers or well into the double digits for those with credit problems.
Also, less-qualified borrowers may sometimes have to pay points to secure that bridge financing. It's really not the best option to have to pay for bridge financing, as you're paying for three loans at the same time.
It may seem like a no-brainer to think about this, but at a time when so many Americans are struggling with debt, it might make sense to lower your sights a bit. There's no shame in going for a smaller, more affordable property in a good neighborhood and trading up later.
Most lenders don't advertise bridge loans because they're not a huge part of their business and administratively are a bit of a pain. As a borrower, you need to ask politely, and if you have any leverage — such as actual money in that bank — you might make the point that it's something nice the lender can do for your loyalty. However, at most major lending institutions, loyalty is sort of an uphill battle unless you have good credit, relatively low debt, and hopefully a few dollars deposited in their accounts.
