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What Happens to Your Mortgage When You Sell Your House and Buy Another

Updated: Jan 29, 2023

Did you ever wonder how people make it work financially when they are buying a new home and still owe on the mortgage of their current home? Most people cannot afford to overlap and pay on two mortgages. But you don’t have to hold off on buying your dream home! It’s scary to think of what would happen if you don’t sell your current home right away, but you really want to put an offer on this amazing new home that won’t stay on the market for long. Thankfully there is a way to list your current home while buying your dream home simultaneously that won’t burden you financially!

The Simple Solution

In a perfect scenario, you would sell your current home at the exact same time that you win the offer you put on your dream home. The process would be so much easier if it worked out that way. But when does life ever work out this easily? Fortunately, there is still a simple solution that helps! The simple solution is the Compass Bridge Loan. A bridge loan is a short-term loan that uses the equity from your current home to help you make an offer on a new one without rushing to sell. You don’t have to hold back on putting down that offer on your dream home after all!

Is A Bridge Loan Right For You?

If you are house-hunting but need to sell your current home, be sure to ask your real estate agent if a bridge loan makes sense for you. Your agent is your guide, resource, and partner from the moment you start searching until you close on your new home. They will understand your unique position of juggling the sale of your current home while putting an offer on a new home without having an upfront cost of a down payment before the closing costs are required. The Compass Bridge Loan can help with this.

The primary benefit of a bridge loan is to provide you with some much-needed breathing room. If you are relocating for a new job or just need to move within a specific timeframe, the bridge loan helps you to purchase a new home when you need it without having to wait for your current home to sell.

If your money is tied up in the equity of your current home, a bridge loan can help you secure the funding to transition to your new home. You can use it for a down payment or your mortgage payments. The beauty of it is that when your current home sells, you can use the proceeds to pay back the bridge loan.

Compass Creates Easy Solutions For Buyers

Another stumbling block many sellers face is that their home requires some repairs or renovations before listing it. They want to get the best price for their home and know that tackling these renovations upfront will ensure a better return on investment. The Compass Concierge service will front the cost of your home improvements in order to sell your home faster and for a higher price.

Whether you are using the Compass Concierge service or handling repairs on your own, it may be easier to have the construction completed when you are out of your current home. The Compass Bridge Loan can help you move out of the house while the repairs are completed.

Flexible Financing

If you are worried about taking out a loan during this tremendous financial transaction of purchasing a new home, keep in mind that a bridge loan is not like typical loans. Most bridge loans are non-recourse, meaning the lender can only seek loan repayment through the property itself. The borrower has no financial responsibility to pay back the loan, and the borrower can’t pursue compensation even if the property's value doesn’t cover the remaining loan balance!

While there is still interest and terms of the loan involved, it’s best to research and find the right lender that offers the best solution for you. Bridge loans are a flexible financing option that can give you access to money when you need it for the short-term process of selling and buying a home. Your real estate agent can help guide you in this process and answer any questions you may have.

Contact us to see if a bridge loan can help get you into your dream home faster!

Image cropped (it is in Canva)

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