Waiting for Your Home to Sell Before You Move?

When you want to close on a new home but your current home hasn't sold yet, there are a number of financing arrangements that can help bridge the gap.

The most common interim financing tool for buyers is a short-term bridge loan which finances the down payment and closing costs for a new home. You repay the bridge loan once your house sells. However, you trade flexibility for a higher interest rate. A better alternative may be a bridge loan with deferred interest payments. It pays off the first mortgage, eliminating one mortgage payment while covering the down payment and closing costs on the new home. As the seller, you often don’t pay anything until the sale of the house. A third possibility is 100 percent financing on the new mortgage. With no down payment needed, you can manage until the home is sold. But you must be approved to hold two mortgages.

The odds of this situation occuring increases when the housing market begins to slow, similar to what we're experiencing in Kitsap County. Obtaining a second mortgage contains some risk. Please check with your accountant since there may be some unintended tax consequences in these senarios.