How You Can Buy a New Home Before Selling Your Old One

Mortgage and Lending with HomeSmart NMLS 1575944 MB 0941439

Sam and Judy had just put their home, of 20 years, up for sale. As, people do, when they are selling their home, they began looking for a new home. Luckily, or so they thought, they found the ideal house only a few days after putting their house up for sale.

When Sam and Judy found the home, they wanted to purchase they were so excited. Their realtor said it shouldn’t be a problem for them to put an offer in because they could put a contingency in the contract. However, that served to be a great problem.

The house Sam and Judy had decided on was a popular one. It was a steal of a deal and had more than one offer in on it. Unfortunately, the seller felt a contingency wasn’t necessary due to the fact that there were cash buyers putting offers in on the home. Sam and Judy lost that home and were feeling a bit concerned. The home they were selling had repairs that were necessary, and their realtor had warned it may be on the market longer than they were hoping.


When a seller doesn’t want a contingency in the deal a smart move is an Arizona bridge loan. A bridge loan, as the name suggests, offers a bridge that allows a buyer to purchase a new property by using the home they currently own as collateral.

An Arizona bridge loan is also known as “gap financing.” They are there for home owners who want to purchase a new home before selling the home they are currently in. Unless you have a large nest egg of cash, most people cannot buy a new home before selling the old one—and in a competitive market most sellers frown upon a contingency. It is very difficult to qualify for two mortgages at one time let alone pay on two mortgages.

This is where a bridge loan can be a buyer’s saving grace. A bridge loan can come from a hard money lender. A hard money lender will loan the money to you and usually give you a few months before a payment is due. Once due, the monthly payments are interest only payments. When the old home sells, the borrower will pay the loan in full in what is called a balloon payment. This allows the borrower to purchase their new home and have time to sell their old home without carrying two mortgages. Once the old home sells, the buyer has money to pay off the loan and pocket the rest of the cash as profit.

Typically, a hard money lender will finance up to 80% of the combined value of both the new home and old home. The other 20% or so usually comes from home equity or savings for the new down payment. There are lenders that will lend more than 80% but be prepared to have the other 20% handy.

Bridge loans can be a life saver for borrowers wanting to purchase their new home without waiting on the old one to sell.

Bridge loans take a shorter time to process than a conventional mortgage. Typically, these loans are approved, and funds are released in two weeks or less. These loans will have a slightly higher interest rate than loans from a traditional lending institution, however, remember you will only be paying interest on the loan until the last payment—the balloon payment.



Dennis Dahlber Broker Ri CEO Level 4 Funding LLCDennis Dahlberg
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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