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Bridge Loans: What Are They and How Might They Help You?

Real Estate Agent with RE/MAX Concepts Licensed in State of Iowa

Imagine for a moment that after looking at houses for sale you found the perfect new home for your family.  It's in the right neighborhood that you've always wanted to live in and you absolutely love it!  The problem is that you haven't sold the home you own now.


You could make an offer on the new home contingent on selling your existing home first, however, most sellers are reluctant to accept such an offer.  If they do accept your offer, you will probably end up paying more for the property as a result.  Having to make a contingent offer almost always results in a major loss of your negotiating power.


Writing a contingent offer may also cause you to become more desperate when trying to sell your home first.  You may accept an offer you wouldn't normally have considered just because you don't want to lose your new dream home.


This is where Bridge Loans can be a lifesaver.  Bridge loans allow you to use the equity on your existing home as collateral on a new home loan thus "bridging" the gap and allowing you to move in to your new home.  You then put your house on the market and when it sells or at the end of the loan term, you pay off the bridge loan.


Most lenders offer more flexible terms for bridge loans than for standard conventional mortgage loans.  To alleviate the financial burden of making double house payments, lenders will design more lenient repayment terms.


Some will simply defer payment until your existing home sells.  Other lenders will have you pay only interest payments, which are much lower, and then the principal would be due when the house is sold or at the end of the loan term.  Generally, most lenders set a maximum loan to value ratio of 75%.  Meaning you can only borrow up to 75% of the loans value, minus the amount of the existing mortgage.


For more specifics on how bridge loans may work for you, I recommend contacting your local lender. If you're in the Newton and Jasper County area of Iowa, I'd be happy to refer you to a couple of great mortgage lenders that would love to help you out.


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If you're looking at houses for sale in the Newton, IA area, or interested in knowing what your home may be worth in today's market, please contact me today to get started.


Buying or selling a home or acreage is a major life choice. Whatever your real estate needs I can help you reach your goals with confidence. My expertise of the Newton and Jasper County, Iowa area will give you the best possible experience from start to finish.


Thank you for taking time to read my Blog today!


Scott Neasham, REALTOR

RE/MAX Concepts

120 N 2nd Ave W

Newton, IA  50208




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Anthony Acosta - ALLATLANTAcondos.com
Harry Norman, REALTORS® - Atlanta, GA
Associate Broker

Good afternoon 

Thank you for sharing your information with us Scott Neasham 

Have a great day.

January 20, 2019. 

Jan 20, 2019 10:51 AM
Scott Neasham

Thanks for the nice comment, hope you're having a great weekend!

Jan 20, 2019 01:55 PM
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Scott.  This is a great overview of bridge loans and how they can be very useful.


Jan 22, 2019 06:38 AM
Scott Neasham

Thank you! Yes a Bridge Loan can really help out a home buyer if they've found the perfect place to move to and need to act fast before selling their old home.

Jan 22, 2019 06:45 AM