How to Shop for Your Next Home Before Selling Your Current One

How to Shop for Your Next Home Before Selling Your Current One

How to Shop for Your Next Home Before Selling Your Current One

One of the biggest hassles of buying a new home is having to sell your current one first. This can often be a long and drawn-out process, during which time you may have to move into temporary housing. Cross collateralization loans, also known as bridge loans, can help you avoid all that by allowing you to shop for your new home before even listing your existing one. 

Bridge loans use the equity in your existing home to create the down payment on your next home. This means that you only need to qualify for the loan on your next house—most bridge loan programs don't work because they require you to qualify for both mortgages. 

If you're thinking of using a bridge loan to buy your next home, here are a few things to keep in mind.

Before You Apply For A Bridge Loan: 

1. Get Pre-Approved: Getting pre-approved for a mortgage is always a good idea, but it's absolutely essential if you're planning on using a bridge loan. This will give you an idea of how much money you'll be able to borrow and will help streamline the process when you're ready to buy your new home.

2. Know The Length Of The Loan: Bridge loans typically have a term of 12 months or less, after which time they must be repaid. Make sure you'll be able to comfortably make the payments on time and that you have a plan in place for repaying the loan when it comes due. 

3. Consider The Cost Of The Loan: Bridge loans come with fees and closing costs, so make sure to factor those into your budget when determining whether or not this type of financing makes sense for you.

4. Have A Plan B In Place: Because bridge loans are short-term financing solutions, there's always the possibility that something could go wrong and you could end up being unable to repay the loan when it comes due. Make sure you have a solid plan in place for repaying the loan—typically through the sale of your old home—so that you're not left stuck with two mortgages. 

If you're thinking of buying a new home but are worried about having to sell your current one first, consider applying for a cross collateralization loan, also known as a bridge loan. This type of financing can allow you to shop for your new home before even listing your old one and can be especially helpful if you're worried about being a contingent buyer or being limited by the length of your escrow period. Just make sure to factor in the cost of the loan and have a solid plan in place for repaying it so that you're not left stuck with two mortgages.

Check in with Team Jacob.Realtor at 541-897-9898 or fill out the below Contact Form to start looking for your dream home today!