Equity on paper and money you can actually use are two different numbers. That gap is where most buy-before-you-sell plans either come together or fall apart.
Recently one of our loan officers talked with a homeowner who wanted to buy her next home before selling her current one. Once we did the real math, there wasn't much room left. His advice: "I'm not in the habit of… not doing business… but not at a price of putting somebody in a poor financial position."
If you're thinking about a bridge loan in Connecticut, here's how to figure out what your equity can really do.
A bridge loan lets you borrow against the home you own now so you can buy the next one before it sells. You move once, then sell your current home on your own timeline and pay the bridge off from the sale.
With AFC's bridge, you don't make monthly payments to us while you carry both houses. You pay it back when your current home sells.
Because the bridge is repaid from your sale, the number that matters isn't your Zillow estimate. It's what you'll walk away with at closing.
Use what comparable homes near you have actually sold for recently, not the highest list price on your street. Your agent can pull this. If the market in your town is softening, build that in now. It's much easier to plan for a lower number than to discover it after you've bought.
Selling a home in Connecticut costs real money: agent commission, your attorney, the state and town conveyance tax, and smaller items like prorated taxes and any credits you negotiate with the buyer. All in, sellers often land somewhere around 6 to 7 percent of the sale price, depending on the deal.
That includes your mortgage payoff (which is a little more than the balance on your statement, because of daily interest) and any home equity line or second mortgage.
What's left is your net equity. That's the number a bridge loan really works with.
Every bridge lender limits how much they'll lend against the combined value of the property, counting your existing mortgage plus the new bridge. The exact limit depends on the lender and the file. The reason is simple. If the sale comes in lower or takes longer than planned, there has to be enough cushion to pay everything off.
When net equity is thin, the cushion disappears. That's when a good lender will tell you a bridge isn't the right tool, even though they could technically write it.
Equity is the first question, not the only one.
A bridge tends to make sense when you have solid net equity after selling costs, your credit and payment history are clean, and the home you want is competitive enough that a sale-contingent offer is likely to lose.
It usually doesn't make sense when the math leaves almost nothing after you sell, when your sale price depends on a best-case number, or when a cheaper option like selling first will work for your situation.
The honest comparison isn't a bridge versus nothing. It's a bridge versus losing the house, moving twice, or paying rent in between.
AFC Mortgage Group helps Connecticut homeowners run these numbers before they write an offer. Learn more about buying before you sell at afcmortgagegroup.net.
Become homeowners. AFC Mortgage Group will help you navigate the loan process, secure financing, and purchase your dream home.
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