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If you want to live in your existing home while you build your dream home, then a bridge loan may be the perfect solution. Combined with a construction loan, a bridge loan gets you access to your equity without having to sell your home. The bridge loan is paid-off when your existing home is sold and you are ready to move into your new home. A bridge loan has the added benefit of not requiring payments during construction. Also, a bridge loan will not affect your debt ratio for the construction loan because it is considered interim financing. If you had to sell your home to access the equity needed for a construction loan, then you would probably have to pay rent for housing until the completion of construction. Although interest accrues on a bridge loan, it will probably be cheaper than paying rent for equivalent housing during the term of construction. A bridge loan is only available in conjunction with a construction loan on a home that you will occupy as your primary residence.
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