Unlock Home Equity to Buy Before You Sell

What’s required to get a bridge loan in New York?

To qualify for a bridge loan in New York, you typically need to meet the following criteria:

• Qualifying income: Lenders will assess your income to ensure you can handle payments on your current mortgage, new mortgage, and the bridge loan.
• Sufficient equity: You need at least 20% equity in your current home, though some lenders may require up to 50%.
• Good credit history: A credit score above 650 is usually necessary, influencing your interest rate and other loan terms.
• Home listed for sale: Many lenders require that your current home is on the market, ensuring it’s likely to sell during the bridge loan term.

How much does a bridge loan cost in New York?

In New York, the cost of a bridge loan generally exceeds that of a standard mortgage. Interest rates on bridge loans are typically 1-3 percentage points higher than those for traditional mortgage loans. Additionally, bridge loans may include extra transaction fees.

This higher cost is due to the increased risk lenders take on with bridge loans. It’s important to consider that your current home may not sell within the expected timeframe. If this happens, you must be financially prepared to cover your mortgage and bridge loan payments.

The rate you receive will depend on factors like your credit score and the lender you choose.

How to reduce bridge loan costs

Applying for a bridge loan with the same lender as your new mortgage’s lender can reduce costs. In such cases, you might avoid additional underwriting or mortgage fees, as your bridge loan and new mortgage will be processed together.

It’s advisable to compare different lenders and loan options. Remember, bridge loans are meant as a short-term solution. Evaluate what financing option aligns best with your needs, considering total costs, convenience, and suitability.

Budget for closing costs

Apart from the loan itself, you must also budget for closing costs and legal and administrative fees. These costs typically range from 1.5% to 3% of the loan amount and can include:

Understanding these costs upfront can help you budget effectively for your bridge loan in New York.

Bridge loan cost example

Below is an example of how much a $500,000 bridge loan might cost, along with possible fees.

You find a home you’d like to purchase, but you’re still waiting for your current New York house to sell. The asking price for the new home is $800,000. You can only come up with $300,000, but you have at least another $500,000 worth of equity in your current property. You want to access that money to cover the shortfall before selling your new home to another buyer.

*These closing costs typically range between 1.5%-3%

Who provides bridge loans in New York?

In New York, the availability of bridge loans may be more limited due to the specific underwriting requirements of this loan type. If you’re considering a bridge loan, exploring options with various lenders is wise. The most common sources for bridge loans in New York include:

• Your mortgage lender: Start with the lender of your current mortgage; they might offer bridge loans to existing customers.
• Local banks: Many community banks in New York have programs tailored to local real estate needs, including bridge loans.
• Credit unions: Member-focused credit unions often provide competitive bridge loan options.
• Hard-money lenders: These lenders can be a good source for faster approvals but might come with higher interest rates.
• Non-qualified mortgage (non-QM) lenders: They offer loans that don’t fit the typical federal guidelines, including bridge loans.

Additionally, some modern real estate companies offer services to help you find a bridge loan, streamlining the gap between buying and selling a home. More on this will be discussed later in the post.