Bridge loans are temporary loans, secured by your existing home, that bridge the gap between the sales price of a new home and the home buyer’s new mortgage in the event the buyer’s existing home hasn’t yet sold before closing. Weighing the benefits and drawbacks of a bridge loan may help you decide if it makes sense for you.

• The buyer can immediately put their home on the market and buy without restrictions.
• Bridge loans might not require monthly payments for a few months.
• The buyer can remove the contingency to sell and still move forward with the purchase if she’s made a contingent offer to buy and the seller issues a Notice to Perform.

• Bridge loans cost more than home equity loans.
• Buyers must be qualified by the lender to own two homes and many might not meet this stringent requirement.
• Making two mortgage payments plus accruing interest on a bridge loan could cause financial stress.