 TITLE: What Is a Bridge Loan? CONTENT: Benefits and Downsides of Bridge Loans\n--------------------------------------\nThere are both advantages and disadvantages of using a bridge loan you make transitioning to a new home go more smoothly. Here's what to consider.\n### Pros\n*   **You don't have to move twice**: If you sell your old home before closing on the new one, you'll likely need to find temporary housing until you complete the process. A bridge loan simplifies the process and can get you into the new home directly.\n*   **You can make a stronger offer**: An alternative to using a bridge loan is making a contingent offer on a new house. This means that your offer to buy is contingent upon you selling your current home. Unfortunately, these offers make for a lot of uncertainty for sellers, so they'll be more likely to take an offer from another buyer without the contingency. If you have a bridge loan, you can eliminate the contingency altogether.\n*   **It can help you qualify for a lower interest rate**: The higher your down payment on a mortgage, the less risk you pose as a borrower. As such, you may qualify for a lower interest rate if you can provide a big down payment. If your current home isn't sold yet, a bridge loan can give you that high down payment and potentially a lower interest rate.\n### Cons\n*   **It can be expensive**: Between fees and high interest rates, a bridge loan can be more expensive than alternatives, including a home equity loan.\n*   **It's not easy to qualify for**: Because you're not selling your current home yet, you may be making two mortgage payments for at least a month or two, and possibly longer. With that kind of debt burden, bridge loan lenders may have strict credit and debt-to-income ratio requirements for those who apply.\n*   **You may not get enough**: Bridge loan lenders typically offer loans of up to a combined loan-to-value ratio of 80%. This means that your current mortgage loan and the bridge loan cannot total more than 80% of the home's fair market value. If your loan-to-value ratio is already above 80% or it's not far below it, you may not get the money you need, making it an unnecessary expense. END