You are ready to move and have listed your current home for sale. You may have started looking or even found a home to purchase. But, you feel stuck. What can you do? You may not be able to qualify to have two mortgage loans at one time. Most people are not able to do that. So, how can you get into your new property while you handle your current mortgage? Depending on the situation, there are a few key things you can do.
Should You Get a Second Mortgage?
Many people assume they need to get a second mortgage in order to make this process happen. The problem is, most people do not qualify to hold two mortgages at one time; and that means lenders simply will not go for it. You also have to consider that it may take six months or longer to sell your home. As a result, you don't want to be in a mortgage loan for two homes at one time for that length of time.
Rent Your Home
One of the options that may work for you is renting your current home until your house sells. This is an option, but finding short term renters can be difficult. You also need to ensure your current lender is okay with you taking this step. Some mortgage loans do not allow for it to happen due to the risk.
A Bridge Loan
One of the options you may have is the use of a bridge loan. A bridge loan is sometimes called gap financing. It lets you borrow money for a down payment on the new home. The amount you can borrow is based on the equity you have. They can be hard to get; they also can be expensive. If you can, borrow from the equity on your home to purchase the second home with a sizable down payment. If that does not work, you may need a bridge loan.
The key thing to remember, when it comes to mortgage loans, is that you need to work with your lender. It may be possible to hold off on the home purchase of the new property until the old home sells. It is often up to the home sellers if they are willing to wait for that to happen. Be sure to tell your agent about this need, too.
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