Come To Find Out
Welcome to Come To Find Out- your resource for all things real estate. You can come here to find out about the current market, terms that you see and hear during a transaction, things to do and not to do when you're in contract. The show will also feature interviews with industry partners and leading experts to help you choose who you want on your home buying journey with you. The home buying, selling and investing process can be so overwhelming, so this guide is meant to make it just "whelming."
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Come To Find Out
Bridge Loans: Buying Before Selling Made Simple
Caught in the real estate catch-22 of needing to sell your home before buying a new one? This episode with mortgage expert Nathan Lindley breaks down how bridge loans can transform your buying and selling experience, potentially saving you thousands while reducing stress.
Nathan explains how bridge loans allow you to tap your existing home equity to purchase your next property before selling, eliminating the need for contingent offers that often get rejected in competitive markets. We explore both traditional approaches and innovative new products that have emerged in the last 18 months, including options that require no monthly payments during the transition period.
The financial advantages are compelling: make stronger offers without sales contingencies, avoid rushed selling decisions under time pressure, and potentially secure better prices on both transactions. The practical benefits might be even more valuable - no more coordinating same-day closings, time to renovate before moving in, and elimination of temporary housing arrangements.
What makes this conversation particularly valuable is Nathan's candor about when these solutions make sense and when they don't. He offers creative strategies for using bridge financing as a backup plan rather than a first option, explains how they work with contingent offers, and highlights the importance of working with knowledgeable professionals who understand these specialized products.
Whether you're planning a move soon or simply want to understand all your future options, this episode provides clear, practical insights into one of real estate's most challenging transitions. Ready to learn if a bridge loan might be right for your next move? Connect with Nathan through the contact information in our show notes.
To contact Nathan Lindley:
email: lindleyloanteam@goldstarfinancial.com
phone: 727.452.9868
https://www.instagram.com/thelindleyloanteam/
https://www.facebook.com/TheLindleyLoanTeam
Sarah Thress
614-893-5885
First Time Home Buyer course: https://sarahthress.graphy.com/
Instagram https://www.instagram.com/sarah_thress_realtor/
Facebook https://www.facebook.com/SarahThressRealtor/
https://www.youtube.com/@LIFEINCOLUMBUS
Hi and welcome to this week's episode of Come to Find Out. This week, we are with Nathan Lindley with Gold Star Mortgage, and if you've been listening at all, you know that he's recorded a few other episodes with me, so it's been so nice of him to take so much time out of his busy schedule to help educate us. But Nathan and his team are located in Florida to take so much time out of his busy schedule to help educate us, but Nathan and his team are located in Florida. As you all know that I am licensed here in Ohio and in Florida, so I really wanted to make sure that I'm getting some good information out there for people that are looking to buy or sell in the Florida market, as well as getting information from Nathan so that you can understand that if you're working with market, as well as you know, getting information from Nathan so that you can understand that if you're working with him, he is very, very knowledgeable and he's going to take really good care of you. So, nathan, thank you, yeah, thank you, yeah, absolutely so, today I really wanted to talk about bridge loans and you know, I feel like I feel like a lot of people you know hear that word bridge or recast, or some people call it the blanket loan, whatever you want to call it.
Speaker 1:But I think that with rates coming down, more buyers getting back into the market, which is going to incentivize more people that were already going to have to sell. Now they're like oh gosh, now's the time. But they're trying to figure out does it make sense for me to buy and then sell, or do I need to sell first and then buy? Should I do a contingent on a home sale, end the contract, things like that? So all of those things become, you know, less options as the market continues to get, you know, crazier. So I would love for you to just kind of explain, you know bridge loan and how you feel that that you know helps people to be more competitive and you know, and just kind of give us some insight.
Speaker 2:So absolutely, and let's start at a real high level and you know, define a bridge loan. So a bridge loan is taking equity in your existing residence and somehow using it to purchase your next home, your next home. And the reason you would do that? There's a couple reasons you would do that. The benefits of doing this process of somehow getting your equity and transferring it to the purchase of your new home without selling first, is number one. It allows you to purchase without a sales contingency and on the realty side, that's golden for both buyers and sellers. It makes it much easier to sell the property to somebody who doesn't have and accept an offer that doesn't have a, you know, a contingency on another sale, so that you don't end up with stacked transactions. It also can affect what you can expect to get from the sale of your home. You know, if you're under the gun of like well, I'm under contract to buy this house in 45 days and I just listed mine, you pretty much have to take whatever offer you get in the first five to 10 days. You know, like you don't have time to mess around. You better be just taking that first offer that you get and you maybe you know, maybe it's difficult to stage your house. I mean, if you've got three kids, five pets and have been a hoarder for the past six years, maybe your house doesn't show as well. You know, maybe your house would show a lot better if you move out, and you know. So those are the reasons to consider something like this. You know, those are the two big reasons is, you know, better negotiating power because you don't have a sales contingency, and better listing power because you're not under a time crunch gun of I've got to take the first offer that comes and potentially, you know, able to sell for more. Again, talk to your real estate professional or will help you with that of. You know whether or not that makes sense and what those numbers might look like. But so that's what we're talking about here is, okay, how can I take? You know I own this house and let's make up some big numbers here. Nice, easy numbers. Remember, we've got a house that's worth 500 and we owe 250 on it. Okay, and I want to buy a house for a million and I want to, you know, have a $500,000 loan because that's how much equity I have there. So make that happen for me, great. Well, the first step.
Speaker 2:The way that we've done this for a long time is we would start with your house and we would do a line of credit. Okay, now this is kind of tricky because people that do lines of credit don't really like to do lines of credit for houses that are going to be sold. So we try to do that before the property is listed for sale. There are other options. Now I actually have a company that does a line of credit that doesn't care if the property is listed for sale, but we do that line of credit and we get X amount of equity out of that. So you know, if it's 500,000, we'll lend you against four. You know 400. Of that you owe 250. So you're walking away with $150,000 of equity. We use that for the down payment and closing costs on the new home.
Speaker 2:And then one of the tricks that I do with my clients is then I'll put in another second mortgage and then we'll do a $500,000 first mortgage. So you end up with the first mortgage that you want, a second mortgage on your new home that will get paid off when you sell the existing home, and a second mortgage on your existing home and a first mortgage. You got four mortgages. You better have some income to be able to qualify for those four mortgages. So over the past 10 years, that has been the normal way of doing a bridge loan. You better be flush with cash to be able to handle those payments. Again, we work in some strategies of owning and paying for mortgages. Yes, you have freedom and flexibility in how fast you sell the property, but you don't want to be carrying four mortgages for that long either, so you want to make sure that you're staging things and having it ready to go pretty quickly. Okay, so that's where we've been over the past five, six, seven years of how we do bridge loans. It lowers the stress in the sense of you're not trying to buy and sell on the same day. It moves over there, but there's a carrying cost for owning two properties for the period of time and there's the stress of being able to handle those payments. Time and there's the stress of being able to handle those payments. Great.
Speaker 2:Now, in the past 18 months, two or three products are coming online. That changed this a little bit. We still go to the first house. Now what we're going to do is we're going to do a cash out refinance. We're going to pay off the existing loan and we're going to do is we're going to do a cash out refinance, okay, we're going to pay off the existing loan and we're going to take 70, 75% of the value of that property. We're going to pay off the old loan and we're going to get that lump of cash. We're going to move that money over, use it for the down payment and closing costs of the new loan or the new purchase property.
Speaker 2:Okay, that all sounds the same, but here's what's cool with these new products. With this new product, that loan that you just took out on your primary residence has no payment. The interest accrues from the day you close, which is three days before your closing of your new property, until you sell it. And you have a year to sell it. Okay, so you can go. You know again, you want to have it listed and be ready to sell it quickly, stage or as soon as you move out, all those things. But there's no payment associated with that property and the interest on the loan is going to accrue and when you sell it, you're going to pay that lump sum interest off. That's the same mechanism that a reverse mortgage uses. This is not a reverse mortgage, don't misunderstand me, but it's the same mechanism of just paying the accrual and there's. So this would be a one year balloon with no payment mortgage that you do a refinance with and then over here now we've used that money to have a down payment on enclosing costs for our new house.
Speaker 2:Now we're probably going to do this at an $800,000 mortgage because we're going to use that money for a 20% down payment and the interest rate on this loan has to be a little higher. It's like, well, I'll just get that with another lender. No, no, no. This product works. The same lender has to do both of them. So you pay a little bit higher rate on this loan, which is okay because we're in a declining rate environment. We know what we can do with that rate in the very near future. We can refinance and get a lower rate.
Speaker 2:So in this house we start with a little bit higher of a loan, we start with a little bit higher of an interest rate, but we're not making two payments. We're not on both houses here, and so while we have this one once, we sell this one now we've got the lump sum from the sale. This loan has to stick around for eight months. The second loan has to stick around for eight months and after that eight-month timeframe then we do a refinance to market rates. Eight months from now, rates are going to be lower than they are right now. I don't know how much, but they're going to be lower. So we're going to be getting a market rate, a future market rate, eight months from now, and we can use that capital from the sale to pay down the loan to whatever balance we want.
Speaker 2:Or, if you know again, you talk with your loan officer, you come up with a strategy how you want to use that capital. You invest it someplace else, do you buy the loan down? You know whatever you need to do, but the benefits being here that you don't. You're not in this situation where you have to both A qualify for and, b be able to financially survive making three or four mortgage payments. You're using the sale of the house to pay for the interest during the time of it and then you're being able to leverage into that.
Speaker 2:Is this the best case for you? It depends. It depends on your situation, it depends on your, on what your goals are. You know, is this the cheapest option? Absolutely not. The cheapest option is going to be to sell it in the morning and buy in the afternoon and live through that, through the craziness and chaos, and hope you get the best you can. That's absolutely going to be your cheapest option because you're not using somebody else's money for a period of time. But for lots of scenarios and lots of situations especially if we get really competitive with the offers and buying again, where you're coming in with a contingency offer and you keep getting declined because the contingency offer keeps getting, you know, turned down this might be a solution for you.
Speaker 1:Yeah, no, I love that and I love the way that you really explained it in such a great way. You know, for anyone that's listening to this, this will also be. You know, it'll be on my YouTube channel, also called Come to Find out. So if you want to see him, um, his visualizations with his hands he's a hand talker just like me Um, but I love that, uh, that you explained it with. You know, I'm always trying to like, okay, over here, we've got this, and then we're going to go over here and we've got this. So I love that you explained it that way, Thank you.
Speaker 2:Yes, and it's a neat product. And there's that one, there's another one that does something very similar, that gives you a three month window to be able to sell your property. There's a couple more of these types of products that are coming out, and when you see products expanding and developing, it's because there's a need. You know, it's because there's somebody needs this product. And so the non-qualified mortgage. You know, arena is coming up with solutions, you know, and this is their answer to that solution of how do I buy without the chaos of trying to sell? Or how do I buy when all of my offers with the sales contingency keep getting declined? Or how do I buy without selling and then renting for you know who knows how long?
Speaker 2:you know, and paying for two moves. I mean that's the other way. You could do this Again, I'm not suggesting this, but sell your house, create all that capital, move out, move somewhere else temporarily until you can buy a new house and then pay for another move into that house. You know that's the other option. You know it's a possibility. Is it the easiest and cheapest? Probably not, you know. Is it the absolute safest? Probably because you have all your numbers up front. But you know this is that's very difficult for people. I know when I had two young kids and animals, that would not be my choice. To move out, sell, you know, find a place to rent for a short period of time and then go through all of that. That would not be my option.
Speaker 1:No, I completely agree. I, ironically, I hate moving, I hate the packing, I hate the unpacking, I hate the packing, I hate the unpacking, I hate the whole process. It is like my least favorite thing to do. And with having, you know, four teenagers and two dogs like theirs, there's absolutely no way that that would be the option that I would choose. But I love that you did.
Speaker 1:You know, talk about that and you know, for anyone that's listening if you haven't listened to any of the previous episodes of anything that I've done talking about this, whenever you are talking about a contingency, you obviously want to have as few contingencies as possible and all that means is just a contingency is there is a stipulation that has to be met before you can actually close on something. So you know, when he says that contingency, that just means that you're like contingent on buying that home but you have to sell your house. You know, first to do, especially being in a seller's market, is you can list your house with the contingency of you need to find a home. So then, whenever someone, when a buyer comes in and it's all transparent, but they come in and they're like, yep, we're totally fine with waiting, and then, but again you're kind of waiting and you're playing the waiting game and you don't know when you're actually going to close, when you're actually going to be able to move. So again all the stars have to align for everyone to be okay with it. And then you've got a situation like I'm in right now with. I've got a client that's in contract to purchase something We've already had to push back closing. That seller is in a contingent contract to purchase something We've already had to push back closing. That seller is in a contingent contract to purchase her next home. So they're waiting on us and those people are contingent on purchasing their next home.
Speaker 1:So there's like a three domino thing that I'm only in charge of one part of it but I know that there's all these other pieces and parts. So it can get very, very sticky when it comes to that and a lot of times you know there aren't people that are able to do that. So it's nice that you know that you I know you've mentioned in previous episodes that you do a discovery call. So I love that.
Speaker 1:During the discovery call you're going to find out all their wants, needs and financial situation and all of that and then you're going to help kind of create what makes the most financial sense for them which I love, because that's what I try and do for people too is like how do we make sure that this makes financial sense for you? So I love that you have kind of like broken that down. Do you think that with the, you know, with us going into the busier market down in Florida, do you think you're going to see a lot more of these like bridge style loans, like do you write a ton of these types of things?
Speaker 2:So I did. We did three of them just bang bang, bang bang right at the beginning of this summer selling season. You know, when we got into that, you know end of the school year, right there at the you know that early June timeframe, that, and they all fit this category of like. You know they wanted to move right away. They, you know they knew they could sell, but they wanted this house. This is what we need. You know we need to move on this very quickly and you know this is so.
Speaker 2:Yes, I think that, as you know, as things kind of progress, I think we are going to see some of these, and some of it is awareness. You know you can walk into a bank and talk to a bank loan officer and I'm talking about the big banks. You know you go walk into whatever name brand you want to say you know, is the loan officer going to be able to do this for you? Are they even going to be aware of it? Probably not. They're probably going to be like, oh no, those are just crazy things those brokers do out there that you know we can't do here and you know they're not safe. You can't, you know. I know I used to work for one of those big banks that's what we told people all the time where, behind the scenes, we were jealous, like how are they doing this? We want to be able to do these cool things. So you know it does exist. You just have to find somebody who is a professional that researches their market. But the other thing that you can do is you can kind of do this as a contingency. You know, if, if you're not the old way, we did these. Well, when I, when I was explaining, we had to do the line of credit before you listed the property for sale, you know we kind of had to be I don't know if deceptive is the right word, but we weren't necessarily you know full disclosure with the lender. That was that we were doing the line of credit with of. You know of that. And so you know it's like, okay, this is. You know we're operating, you know, within the guidelines, but we're circumventing them to get an end result.
Speaker 2:Now we're getting products that are specifically designed for this process and so you can say, okay, well, listen, I've got my bridge loan pre-approved and set up, I've got my property listed for sale. Or I've got my property, you know, ready to list for sale, you know I'll make my offer and maybe make the offer with the contingency and then if they come back and say no, we don't want the contingency, you know you speak with your real estate agent and make sure that you know, let's say I was like hey, she can whisper in the ear of the listing agent and say, hey, we can take this contingency off if you really need us to. We want to put it on there to begin with, but we can remove it very easily. We are, we have a plan B in place. So maybe using it as a stack of this is plan A. But if the seller doesn't want that and if the seller's in the need of the money right away and they're willing to give you a better deal, if you can sign right here, right now, without a contingency, great, we'll take that better deal. And then you take the bridge loan so that you're the one that has the flexibility.
Speaker 2:So you know you always want to kind of just discuss those you know and discuss with the listing side what their goals are, what your goals are, and if you've got this already worked out as a contingency, as a plan B, you know, I think that's where we're going to see it is. You know I'm meeting with a client tonight that this is what we're going to propose. You know the listing agent has already spoken with them about listing their property. The listing agent is also going to help them with the purchase of their property. And this is you know, and I'm going to meet with them and we're going to say this is an option, you know. So they can go looking, even starting this weekend, knowing that the sooner they pick it, that if they go under contract, the more likely we are to do the bridge loan process.
Speaker 2:But as they get further and get more organized and you know maybe they don't need it, you know, maybe they find a scenario where it's not necessary Fantastic, that's good for everyone, because the reality is, no matter what we do, we're probably going to be refinancing you in a year anyway. That's a whole other conversation. But anything you do right now, any closing you do right now, absolutely do it because you're going to get a better price on the house right now than you are a year from now, and then I can get you a lower rate a year from now. So it doesn't really matter what type of loan you get into right now. You're probably going to be refinancing it in the relatively near future anyway.
Speaker 1:Yes, well, and I love that, and I love that you brought up that point, because that was going to be.
Speaker 1:My next question is if someone goes down this path of talking to you and you know you have the discovery call and you're like, yep, we can make this happen and make this happen, unless they kind of pull the trigger on that and say, yes, we want to do it, it's not actually, they're not actually going to have to pay for it unless they have to use it.
Speaker 1:So at least they would have that in their toolbox and know, hey, I can do this if I need to, and I love your example of you know, let's make an offer and let's make it contingent on selling your house and if, for whatever reason you know, let's say we get into multiple offers or whatever, then you know cool, you know what. We can actually take that off and we've got another way. It may still work out to where you don't even have to use that bridge loan because you're going to list your house and you may end up selling it before or like right after. I mean, there's so many different things that come into play. Absolutely, yeah, so I love that you kind of brought that up.
Speaker 2:Yeah, and let me reiterate here from that conversation, or from that piece the loan on your existing home, the pulling out of that money, the pulling out of that equity, does not happen until three days before the closing of your new purchase home. You know, we don't do that loan. We set it up, we pre-qualify it, we pre-approve it, you know those types of steps. But the actual closing date for that refinance is tied to, and the reason it's three days before is because there's always a three-day right of rescission when you do a cash out refinance and we have to for those funds to be released. So we close three days prior so that those funds are available three days later on your closing prior, so that those funds are available three days later on your closing.
Speaker 2:So you could, you know, if you've got a long closing date, even with a you know, a bridge loan, this bridge loan procedure in place, you could still try to sell your house beforehand and still try to sell it, you know, that morning, in the sense of you know, closing the morning of the purchase and then and then skip out of the bridge loan process and just go back to a more conventional, you know, transfer of proceeds on the day of closing.
Speaker 2:You know you absolutely have that flexibility, but this is about having options and this is about understanding of you know what do you have to do to make your offer the most attractive. You know, and, as you were explaining, the less contingencies on your offer, the more attractive your offer is, to the point that maybe you get a better price, Maybe you don't get into negotiation for higher price If there's five offers and all of them have contingencies. Again, most of the loans right now are primaries. You know people are buying their primary houses, so a lot of people that are buying have contingencies and if all five offers have contingencies and you're the one and only offer that can take that away, you might get the best price.
Speaker 1:Yeah, exactly. Well, and what I've done before is in a competitive situation is I've submitted an offer and I said that we were contingent on selling the house with the listing agent. I've done this from the listing agent side and also from the buy side. But there's language that we can put in there that, hey, we're in contract and you can list it as contingent escape, and so what that means is there's verbiage written in there that protects everybody. But there's verbiage written in there that if the seller can continue to have showings, the seller can continue to accept offers even though you're already in contract. They can continue to get those. If they get something that is better than the offer that you have with no home sale contingency, they can come back to you and you have 48 hours to remove that contingency and meet or beat that offer to stay in contract.
Speaker 1:Now it's a lot of moving parts and there's a lot of what-ifs and there's a lot of gambling in that, but there is always that. So if you knew you had in your toolbox that you could pull out and do this bridge loan, then it is going to give less risk for the buyer to say, sure, that's fine, go ahead and continue to take offers. And then I've got 48 hours, and so what's going to happen is, you know, if I haven't already sold my house, I'm going to, you know, I'm going to give Nathan a call and I'm going to tell him hey, I'm going to need to go ahead and do this, and then you just remove that. You still have all the options of selling your house. You may get a cash offer and someone's like I can sell, I can buy it in seven days, cool.
Speaker 1:So then they buy it. Then you already have the money. You don't even have to use the bridge loan. So there's so many different options and creative ways to do this. So I love that. You, you know, you kind of brought that up that you know, even though you have this discussion, even though you've, you know, done all of the paperwork short of doing the final signature paperwork, you still can quote, unquote, like, back out of it without being, you know, penalized.
Speaker 2:And, but you gotta be working with a good loan officer. You really do. You know penalized and, but you got to be working with a good loan officer. You really do. You know because you're talking about changing programs, changing plans. You know somebody who's whose office has the bandwidth to you know again, not just be order takers. You know, if you're a loan officer, ask if you want fries with that. When you finish telling them what you want, go find another loan officer. You know someone who can explain and go into extreme detail, because you've really got to be working with a good lending partner. You know an advisor, someone who you can trust, someone who you can work with, who can make you know these types of things, because you are, in a sense, the more options you have, the more complicated things get. In a sense, the more options you have, the more complicated things get.
Speaker 1:That's always the case.
Speaker 2:You know, the easiest clients I work with are the ones that they have one loan option. This is it. This is the only thing I can do for you. There are no other options. Take it or leave it. You know I don't like those. You know situations. I hate presenting that to a client, but those are the easiest ones to work with, because it's either this or nothing.
Speaker 2:When we're talking about this, we're talking about putting in layers to the onion, and so you've got to be able to be flexible with this. But it gives you again. It's all about making your offer more attractive so that you get the house that you want at a better price, and if you and if we can also make it easier in the steps. You know, because if all of that happens and you sell, then you still have the chaos of trying to do this all in one day. You know that by itself is enough for some people to want to do it this way.
Speaker 2:You know of just having a little bit of overlap. You know like, hey, I want to own both houses for a month just so I can go in and paint and do this in my new house before I move into it, and then I can say you know that in itself is a value. You know that in itself is worth something. But again, speak with your loan officer. Make sure your loan officer and your real estate agent are working together as a team, you know, and they can make things like this happen for you.
Speaker 1:Yeah, I love that and that is so true. You know, I always tell people if you're asking a question and you're feeling like you're not getting the answer and you've maybe asked it multiple different ways and you're still not getting your questions answered it might be time to interview another lender, and that's okay. You know it might be time to interview another lender, and that's okay. You know it's okay to shop around, just like you know I may not be everybody's cup of tea, for you know, as a realtor, that's fine. Please shop around, because I want you to feel comfortable and I only want to work with people that want to work with me. That you know, trust me and trust what I'm telling them, and you know. And it should be the same with your lender.
Speaker 2:Absolutely.
Speaker 1:Yeah, I love it. Well, Nathan, thank you so much for joining us today. Again, I know you have a very busy schedule, so I love that. You did such a great job at explaining bridge loans, explaining that there are all of these options and making sure that people are well-educated. So thank you.
Speaker 2:My pleasure. It's always a pleasure to join you, to help you and your clients. We enjoy it and appreciate it very much. Thank you so much.
Speaker 1:Yeah, absolutely, and, as always, I will have all of Nathan's information in the show notes. So definitely make sure you go there, follow his socials, but also, you know, make sure that you're kind of reaching out and asking all of the questions. There is never a fee for a discovery call for either of us, so feel free to reach out to either of us. But thank you for listening this week and thanks for joining us on come to find out. Please make sure that you are leaving a review, because feedback is the greatest gift that you can give me. Also, make sure that you're sharing this, because that is the greatest compliment that you can give Nathan and myself. And also make sure you're following the show so you never miss an episode. Thanks so much and we'll see you next time. On come to find out.