Finding Flexibility with a Bridge Loan

Many people who want to move to Kissing Tree are worried about the timing of selling their existing home. They don’t want to miss out on their dream home in KT, but they aren’t sure how long it will take to sell their current home. In some cases, buyers might need the equity from their current house to finance their KT home, or they might not want to carry two home loans. In many of these situations, a Bridge Loan can be a helpful tool that reduces the stress of the homebuying process.

Bridging the Gap

A Bridge Loan is a short-term loan that can bridge the gap between the purchase of the new home and the sale of the existing home. It allows you to close on the purchase of your Kissing Tree home before your current home is sold (or even listed). “If you don’t want two payments or you have assets in an account you don’t want to liquidate for tax purposes, a Bridge Loan can really simplify things,” says Adam Stephens, a loan officer with Capstar Lending/First Bank. “You can qualify with what your future mortgage payment will be once your existing home sells, and then once your home sells, the Bridge Loan modifies into a conventional or VA loan. And you don’t have to choose the terms of that final loan until you know the details of your existing home sale. It leaves more flexibility in the process.”

It’s All About Timing

Timing can be a big reason why people choose to go with a Bridge Loan. Some people may not want to put their current home on the market while they still live there. “I’ve had clients who didn’t want strangers to come into their homes with their pets,” Adam says. “In another case, people were avoiding moving twice — they would have had to sell their home and move into a rental until their Kissing Tree home was complete. The seasons can make a difference, too — I had one client who closed on their home in Kissing Tree in the winter, but wanted to wait until the spring to list their home in Port Aransas. The Bridge Loan gave them time to do that.”

No Down Payment, No Monthly Payments

Every buyer situation is unique, but with a Bridge Loan, no down payment is usually required. There are no monthly payments until the current home is sold, and the interest on the Bridge Loan accrues and is paid off with the sale of the current home. Once the current home sells, the Bridge Loan can be paid off or modified into a conventional or VA mortgage. Bridge Loans typically have a six-month term, but they can be extended if the current home doesn’t sell within that time period. “People often worry about not selling their old home within the time period, but that rarely happens,” Adam says. “Of course, every situation is unique, but we do a market analysis as part of the loan process.” 

Meet Adam Stephens

Bridge Loans are a specialized loan product, and our team often works with Adam Stephens at Capstar Lending (a division of First Bank, NMLS 216606). You might have met Adam at our recent KTX event. Adam has been a loan originator since 1998, working and living in Central Texas, and he loves helping KT residents get into their dream homes. If you have any questions or want to talk about financing options for your unique situation, you can contact Adam at 512-689-7650 or adam.stephens@capstarlending.com. 

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