June 21st, 2018 12:41 PM by Michele Morse Reen
The Bay Area real estate market continues to grow at exponential rates. Over the last six years, the median home price has surged by 143%. The area is currently experiencing a feverish high-demand, very-low-supply dynamic. The near-continuous hike in home prices means that many Bay Area homeowners have enjoyed surge in equity, thereby giving them the means to upgrade to larger homes.
However, many of the would-be homebuyers have their wealth tied up in their first home. They can’t afford to upgrade to a new house without selling the old one first. They could put in contingency offers on the homes they hope to buy, but with a long line of other buyers ready to put down all-cash offers, it may be difficult to compete.
In an ideal world, they could sell their property at the same time as buying their new property, but two escrows would mean double the risk. If they sell their home first, they would need to rent until they find a new home and their offer gets accepted. However, with the high-demand of the Bay Area real estate market, it could take months or more, which means potentially wasting thousands of dollars on a rental property.
A potential solution to this type of dilemma is a getting a Bridge Loan. A Bridge Loan is not a replacement for a mortgage; it’s a loan secured by your current home as collateral. This type of loan is typically used by home buyers to purchase a new home prior to selling their current home. It’s a short-term loan that gets repaid within a six-month to three-year timeframe, depending on the terms that are negotiated.
Essentially, a Bridge Loan allows a Bay Area home buyer to purchase their second home, even if their first one hasn’t sold yet. Since the Bay Area real estate market is in no short supply of buyers, selling a home usually isn’t a problem, it’s just a matter of time – Bridge Loans allow for time.
If you want to further explore whether a Bridge Loan is right for your situation, contact us today. The Reen Team will give you the individual attention you deserve. We will help you understand the process to qualify, apply and be approved.
Call today at (408) 626-1879! You can also apply here.