Stop Stressing Out About Your Down Payment! Try Compass Bridge Loans!
So, you’re ready to move into a new home. You’ve searched high and low to find the perfect place. You’ve managed your finances well, and the new mortgage payments you’re looking at feel doable. Comfy, even.
There’s just one tiny-itty-bitty-little hurdle to deal with: The down payment. Uuuuugh.
Even if your lender has agreed to a relatively small down payment percentage, you still have to come up with multiple thousands of dollars. Like, now.
What are you supposed to do? Spend your emergency savings? Dip into the kids’ college fund? Draw straws to see whose car you have to sell?
Meh. Let’s talk about other options far less likely to land you in a family therapist’s office.
Option 1: Sell Your Current Place First
Many people plan to use the proceeds from the sale of Home 1 toward the down payment on Home 2. But around here, that requires near-perfect timing and extraordinarily good luck.
Instead, here’s what tends to happen: The Perfect Home hits the market. You rush to make an offer before someone else snatches it up. You need some time to scrape together a down payment, so you ask for a 45-day close instead of a 30-day close. Aaaaaand, there goes your offer—into the proverbial trash can. Denver’s real estate market is far too fast and furious for that approach.
“No problem,” you might be thinking. “I’ll just go ahead and sell my place before I even start looking for a new one. That way I’ll have the cash in hand when I need it. Boom.”
Good plan, friend—except what if your house sells fast (hot market, remember) and then you can’t find one you love for a few weeks… or months? Do you really want to try to find a place to rent in the meantime? Couch surf? Cozy up with your inlaws?
Long story short: There’s no guarantee House 1 will sell in time for all the pieces to fall into place for House 2.
So what can you do? Well, you could cross your fingers and hope for everything to work out. Or, here’s a better idea comin’ in hot…
Option 2: Take Out a Bridge Loan
What the heck is a bridge loan? It’s simply a loan that allows you to use the equity in your current house to make an offer on a new one. It helps you bridge the gap between House 1 and House 2.
The details of a bridge loan will vary depending on the lender, but generally they’ll cover any costs associated with buying a new house, including:
Down payment
Closing costs
Application or origination fees
Appraisals
Even monthly mortgage payments
We love a bridge loan for three reasons:
No pressure, no rush. When you take out a bridge loan, you don’t need to hurry-up the sale of your current home. You’ll have the funds you need to buy House 2, even while you still own House 1. So you can take the time you need, invite multiple offers, and make a confident decision.
Make more attractive offers. Without the need for timing-related contingencies, a seller will find your offer muuuuuuch more interesting.
In a word: Renovations. Getting a property ready to list usually involves a home improvement project or two. Well, have you ever tried to tear out your kitchen and put in a new one—while also attempting to, you know, live in your home? It’s the worst. With a bridge loan, you can move into your new house before preparing your old one for sale.
The Compass Bridge Loan Difference
Bridge loans are available to anyone who qualifies. But when you work with a certified Compass Agent (*cough* Dwell Denver *cough*) there are exclusive perks. Don’t you just love exclusive perks?
Get an interest-free advance.
If you hire us to sell your current home, you can have up to six months of your bridge loan and associated costs fronted—interest-free and regardless of your lender.
Combine Compass benefits for the best case scenario.
Take full advantage of the Dwell Denver + Compass partnership by combining your bridge loan with Compass Concierge. The bridge loan gets you the funds for a down payment; Compass Concierge gets you the funds you need to up-level your current home for a quicker, higher-priced sale.
Use your favorite lender.
Compass and Dwell Denver offer you the flexibility of choosing the lender that best suits your needs. Find the one with the best rates. Or the friendliest people. Or the one with the best-smelling lobby. The choice is all yours. (If you’re not sure where to start, we have a couple of recommendations.)
How Compass Bridge Loans Work
When the time comes, we’ll be happy to walk you through this process step-by-step, but here’s the skinny:
Check with a bridge loan lender to learn your financing options and if you qualify.
Apply to get pre-approved for a bridge loan with the lender of your choice, while we help you look for your new place.
Use your approved bridge loan to strengthen your bid on a new home.
Move into your new home while we work to sell your current home.
When your old home sells, simply use the proceeds to pay back the bridge loan (and advance, if you go that route).
You Can Do This. We Can Help.
We get it: Some of this stuff sounds boring at best and complicated at worst. Don’t let the yuck of buying/selling/down-payment-ing deter you from getting into the house of your dreams. We’re more than happy to help you sort it all out in a way that makes sense for you.
With Dwell Denver and a Compass bridge loan, buying your new home is possible—and far easier than you think! Book a discovery meeting today to explore your options.
