Bridge Loan Calculator

What is a Bridge Loan?

A bridge loan is a short-term loan that is designed to “bridge the gap” between the time you buy a new home and the time you sell your existing one. It allows you to tap into the equity of your current home to use as a down payment for your next home. This can be a powerful tool in a competitive real estate market, as it allows you to make a non-contingent offer on a new house without having to sell your old one first. Our Bridge Loan Calculator is designed to help you understand the costs and mechanics of this specialized financial product.

How This Bridge Loan Calculator Works

Our calculator simplifies the process of estimating the costs of a bridge loan. Here’s a breakdown of the key inputs and what they mean for your results:

• Current Home Details: By entering your current home’s value and mortgage balance, the calculator determines your available equity. Lenders typically allow you to borrow up to 80% of your home’s value, minus your mortgage.
• New Home & Loan Details: The price of your new home determines how much of a down payment you’ll need. The interest rate and term for the bridge loan are used to calculate your monthly payments.
• The Results: The Bridge Loan Calculator will show you the total loan amount you might qualify for, your monthly interest-only payment, and the total cost of the loan including origination fees. This gives you a clear picture of the financial commitment involved.

The Pros and Cons of a Bridge Loan

Bridge loans offer flexibility, but they come with risks and higher costs. It’s crucial to weigh the benefits against the drawbacks.

Pros:

• Make a Stronger Offer: By removing the home sale contingency, your offer on a new home is much more attractive to sellers.
• Avoid Moving Twice: You can buy your new home and move in before you have to show and sell your old one, avoiding the hassle of temporary housing.
• Flexibility: It gives you time to wait for the right offer on your current home, rather than being forced to sell quickly.

Cons:

• Higher Interest Rates: Bridge loan rates are significantly higher than traditional mortgage rates.
• Fees: These loans come with origination fees and closing costs, which our Bridge Loan Calculator helps you estimate.
• The Risk of Two Payments: The biggest risk is that your old home doesn’t sell as quickly as you expect. This could leave you responsible for two mortgage payments (your old mortgage and the new bridge loan payment) at the same time.