I can’t tell you how happy I was to receive an email today announcing that Leader Bank, a great local bank based in Arlington, is now going to be offering bridge loans, enabling home buyers to tap into the equity of their existing home for the downpayment on a new home before they sell.
Why this is soooo critical…
In a market like ours where inventory is so low and demand is so high, many potential sellers have been trapped because they need the money from the sale of their home as a downpayment for a new home, but are (reasonably) afraid to sell their homes for fear they won’t find something to buy. With bridge loans as an option, they can start their new home search BEFORE listing their current home, knowing they can use the bridge loan for their downpayment. So they can buy home #2 and THEN list home #1 for sale.
Here’s an example of how it would work:
This used to be an option that many people took advantage of until the mortgage crisis lead banks into hyper-conservative mode and bridge loans went away. Now that they’re back… well, I don’t think our inventory shortage will be solved overnight, but I’m hopeful that this may improve the situation somewhat.
Thank you, Leader Bank!