A bridge loan lets you use the equity in your current home to fund the down payment on your next one—so you can buy first, sell second, and move once.
Buy Before You Sell: How a Bridge Loan Works (Without the Headache)
At People Driven Credit Union, this program is a fixed-rate balloon loan with a 6-month term; monthly payments are calculated on a 240-month amortization, and the remaining balance is due in a single balloon payment when your current home sells or at maturity.
What It Is (Plain English)
Here’s the simple version: you borrow against your current home to unlock funds for the next one, make predictable payments for a few months, then pay the rest off when your home sells.
- Short-term structure: Fixed-rate balloon loan with a 6-month term.
- Predictable payments: Monthly payment sized using a 240-month amortization schedule.
- Single payoff: Remaining principal is due in one balloon payment when your current home sells or at maturity.
- Purpose-built: Converts existing equity into your next home’s down payment and closing costs.
Bottom line: it’s a timing tool—steady monthly payments now, one clean payoff later.
When It Helps
Bridge loans shine when timing—not long-term financing—is the main challenge. These are the common situations where members use one confidently.
- Competitive offers: Make a stronger, non-contingent offer in a tight market.
- New construction: Stay put while your new home is finished, then move once.
- Relocation: Start the new job and settle in without perfectly aligned closings.
- Preserve liquidity: Tap home equity instead of liquidating investments for the down payment.
- Prep-to-list: Handle repairs or staging without moving out first.
If your goal is to win the right home and avoid the double-move circus, this structure fits the job.
Costs and Fees (What to Expect)
We keep the math straightforward. You’ll see every cost up front so you can weigh the short-term expense against the convenience of buying before you sell.
- Interest: Accrues on the outstanding balance during the short term.
- Origination: 1% origination fee (People Driven Credit Union bridge program).
- Third-party costs: Typical items like appraisal, title, recording, and related charges.
- Total short-term cost: A few months of interest + 1% origination + third-party fees (we’ll estimate this before you decide).
Think of the cost as the price of speed and certainty—so you can buy now and move once.
A Simple Timeline Example
Here’s a realistic, no-drama sequence so you can picture how the process flows from pre-qual to payoff.
- Week 0–1: Pre-qualification and numbers review (equity, listing plan, two-payment budget).
- Week 2–4: Make a non-contingent offer; close on the new home; begin monthly payments based on 240-month amortization.
- Week 4–10: List and sell your current home.
- Sale closing: Proceeds pay off the remaining principal in a single balloon; you continue with only the new mortgage.
The idea is simple: secure the new home, then let the sale of your old one retire the bridge in one clean step.
Risks and Safeguards (Straight Talk)
No surprises—we call out the trade-offs and how we help you plan around them.
- Sale timing risk: If your home sells slower than expected, you carry payments longer. Safeguard: Price realistically, prep the home, and list early.
- Maturity risk: The remaining balance is due at or before 6 months. Safeguard: Set conservative timelines and stay in close contact if market conditions shift.
- Market/value risk: Lower-than-expected proceeds can compress cash. Safeguard: Build a cushion—don’t borrow to the last dollar.
- Cash-flow strain: Brief overlap alongside your new mortgage. Safeguard: We’ll map a month-by-month budget before you proceed.
With a realistic listing plan and a prudent cushion, most members navigate the short overlap smoothly.
Connect with a Home Equity Specialist
Want a clear, no-pressure walkthrough with your numbers and timeline?
Connect with a Home Equity Specialist or call 248-263-4100. We’ll compare options and give you a straightforward plan before you decide.
Important Information
Please review these key details before you apply.
- Balloon payment: The unpaid principal and any accrued interest are due at payoff/maturity.
- Fixed-rate, short-term: 6-month term; monthly payments based on a 240-month amortization schedule.
- Secured loan: Your home secures the loan; failure to repay could result in foreclosure.
- Subject to approval: Membership and eligibility requirements apply. Approval depends on credit, collateral, income/asset verification, and program guidelines.
- Costs: Member pays a 1% origination fee and applicable third-party fees.
- Rates/terms: Rates, terms, and fees are subject to change without notice. Actual APR depends on creditworthiness, collateral, and loan amount.
- Equal Housing Lender. NMLS #776727.
We’ll provide current disclosures and a cost estimate so you can make an informed decision with confidence.
