Bridge Loans in South Carolina: How to Unlock Home Equity to Buy Before You Sell
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Joseph Gordon EditorJoseph Gordon is an Editor with HomeLight. He has several years of experience reporting on the commercial real estate and insurance industries.
If you’re ready to buy a new home in South Carolina but still need to sell your current one, it can be challenging to figure out the correct timing. Coordinating the sale of your current home and purchasing a new one is even more difficult when competition is fierce and prices are high. You might think your only option is to sell, find temporary housing, and hope your next home becomes available soon.
A bridge loan could offer a better solution. With short-term financing, a bridge loan helps you secure your new home while giving you the time to sell your existing one—making it easier to move forward without the juggling act.
Yes, You Can Buy Before You Sell. Why Move Twice?
Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.
DISCLAIMER: As a friendly reminder, this post is intended for educational purposes, not financial advice. If you need assistance navigating the use of a bridge loan in South Carolina, HomeLight encourages you to reach out to your own advisor.
What is a bridge loan, in simple words?
A bridge loan, sometimes called a swing loan or gap financing, is a short-term loan designed to help you buy a new home while you’re still working on selling your current one. This type of loan leverages the equity in your existing property, giving you the cash you need for a down payment and closing costs on your next home.
While bridge loans tend to have higher rates than traditional mortgages, they offer a convenient and quick solution for homeowners who need flexibility to make a smooth transition.
How does a bridge loan work in South Carolina?
A typical scenario where a South Carolina buyer might need a bridge loan is when they find the right new home before their current one has sold. In this case, you can use the equity from your existing home to cover the down payment and closing costs on your new purchase.
Usually, the lender handling your new mortgage can also provide a bridge loan, often with terms lasting six months to one year. As part of the approval process, they may calculate your debt-to-income ratio (DTI), including payments on both your current and new mortgages and any interest on the bridge loan, if applicable.
In some cases, if your existing home is already under contract and the buyer’s loan is approved, the lender might only count the new mortgage in your DTI.
What are the benefits of a bridge loan in South Carolina?
Using a bridge loan has several benefits, including allowing you to buy your new home while smoothly managing the transition.
- You can make a non-contingent offer on your new home
- You only have to move once
- You can prepare your old home for sale after moving out
- You can complete staging without the pressure of living in the home
- You can act quickly on a new home without waiting to sell your current one
What are the drawbacks of a bridge loan?
While a bridge loan can provide flexibility, it also comes with a few potential drawbacks that are important to consider.
- Additional costs, including underwriting and origination fees
- Higher interest rates than a traditional mortgage
- The added financial strain of paying up to two mortgages and a bridge loan
- May be harder to qualify for than a traditional mortgage
- Underwriting can sometimes take longer than expected
Lenders will review both your income and the equity in your current home to determine how much you can borrow. Qualifying may be challenging if you owe more than 80% of your home’s value.
When is a bridge loan a good solution?
A bridge loan isn’t the right fit for every situation, but in some cases, it can make the buy-sell transition smoother.
Some scenarios where a bridge loan might be a helpful solution include:
- You need the equity from your current home for a down payment on your new home.
- You want to avoid a double move and interim housing by bridging the sale and purchase timelines.
- Your dream home just became available, and you’re eager to act quickly without delays.
- Your offer’s home sale contingency has been a deal-breaker, and you need immediate purchasing power.
- You’re unable to prepare or stage your current home for sale while still living in it, and selling a vacant or staged home may be more appealing and convenient.
What’s required to get a bridge loan in South Carolina?
To qualify for a bridge loan in South Carolina, lenders generally look for the following:
- Qualifying income: Your lender will review your income to confirm you can handle payments on your current mortgage, new mortgage, and potentially interest-only payments on the bridge loan.
- Sufficient equity: Typically, you’ll need at least 20% equity in your current home; some lenders may require up to 50%.
- Good credit history: Most lenders require a credit score above 650, which could influence your interest rate and other terms.
- Your current home to be listed for sale: While not always required, some lenders want proof that your home is on the market to ensure it will sell within the bridge loan term.
How much does a bridge loan cost in South Carolina?
Bridge loan cost example
Below is an example of how much a $200,000 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 South Carolina house to sell. The new home’s asking price is $350,000. You can only come up with $150,000, but you have at least another $200,000 worth of equity in your current property. You want to access that money to cover the shortfall before your new home is sold to another buyer.
| Net loan amount | $200,000 | $200,000 |
| Interest (varies) | 10% (example for 6 months) | $10,000 |
| Origination fee | 1.5% | $3,000 |
| Underwriting fee | $1,000 | $1,000 |
| Appraisal fee | $700 | $700 |
| Closing cost* | 2% | $4,000 |
| Total repayable amount | $218,700 |
*These closing costs typically range between 1.5%-3%
What's Your Current Home Worth?
As you make plans to buy a new home, get a value estimate on your current house from HomeLight for free. Our tool analyzes records of recently sold homes near you, your home’s last sale price, and other market trends to provide a preliminary range of value in under two minutes.
Who provides bridge loans in South Carolina?
Due to the specific requirements for bridge loans, fewer institutions in South Carolina may offer them. Potential borrowers may need to explore multiple lenders before finding the right fit. The most common sources for bridge loans include:
- Your mortgage lender
- Local banks
- Credit unions
- Hard-money lenders
- Non-qualified mortgage (non-QM) lenders
Additionally, some modern real estate companies can help you secure a bridge loan and manage the transition between buying and selling. We’ll cover how these services work later in this post.
Are there alternatives to bridge loans in South Carolina?
While a bridge loan might not work for every South Carolina homeowner’s unique situation, there are alternatives to consider:
- Home equity loan: This kind of loan (sometimes called a HEL) allows you to borrow money using the equity in your home as collateral. Interest rates for a home equity loan can be more expensive than your current rate on your first mortgage, but instead of completing a cash-out refinance (paying off the first mortgage and borrowing cash), you can just borrow the money you need at the higher interest rate and leave your first mortgage of at its lower rate.
- Home equity line of credit (HELOC): Another option to use your existing equity is a HELOC. This allows you to pull money out of your property for a relatively low interest rate. Instead of receiving the money all at once, your lender will extend a line of credit for you to borrow against. You may have to pay an early closure fee if you open this line of credit and close it very soon after. Unlike a home equity loan, HELOCs typically have adjustable interest rates.
- Cash-out refinance: This type of loan lets you pull cash out of your home while refinancing your previous mortgage at the same time. Interest rates are typically higher for these kinds of loans compared to regular refinances but are lower than those for bridge loans. This is not a solution for everyone, though. For example, you cannot do two owner-occupied loans within one year of one another. This would mean that you might have to wait longer to finance your new purchase with an owner-occupied mortgage using the cash from your cash-out refinance.
- 80-10-10 (piggyback) loan: This option is called a piggyback loan because you would be taking a first mortgage and second mortgage out at the same time to fund your new purchase — this means that you would only need 10% down. For buyers who can’t make as large of a down payment before selling their previous home, this could be a solution that helps them avoid the cost of mortgage insurance. You would, however, still be carrying the cost of three mortgage payments until you sell your current home and can pay off the second mortgage.
- A 401k loan: Borrowing against your retirement account comes with some benefits and drawbacks — your repayment period will be relatively short (up to 5 years), and your monthly payment will likely be high. This could affect your ability to qualify for your new mortgage, as your lender will need to include this monthly payment when calculating your debt-to-income ratio. If your 401k plan allows, you might be able to borrow up to $50,000 to put toward your new purchase.
Are there modern ways to buy a house before I sell?
With today’s technology, real estate solution companies like HomeLight incorporate bridge loans into convenient programs that streamline the process of buying and selling a house simultaneously in South Carolina. These “Buy Before You Sell” programs can provide a more complete “bridge” to help you successfully complete your move to a new home, thereby reducing stress and worry.
With your South Carolina agent, HomeLight can help you move into your new home with speed and certainty while helping you get the strongest possible offer for your old home. Check with your agent to see if HomeLight Buy Before You Sell is available in your area.
Examples of other “Buy Before You Sell,” or home trade-in service companies include Knock, Orchard, Flyhomes, and Homeward.
How does HomeLight Buy Before You Sell work?
Here is how HomeLight’s Buy Before You Sell program works for home sellers in South Carolina:
1. Apply in minutes with no commitment: Find out if your property is a good fit for the program and get your equity unlock amount approved in 24 hours or less. No cost or commitment is required.
2. Buy your dream home with confidence: Once you’re approved, you’ll have access to a portion of your equity in your current home. You’ll be able to submit a competitive offer with no home sale contingency at any time — regardless of how long it takes to find your dream home. Our near-instant Equity Unlock Calculator lets you estimate how much equity we can unlock from your current home.
3. Sell your current home with peace of mind: After you move into your new home, we will list your unoccupied home on the market to attract the strongest offer possible. You’ll receive the remainder of your equity after the home sells.
Benefits of Homelight Buy Before You Sell
- Flexibility in timelines: No need to sync up sale and purchase dates perfectly. This program gives you breathing space to plan your move without feeling hurried.
- Financial peace of mind: Say goodbye to the stress of potential double mortgages or dipping into savings to bridge the gap between homes.
- Enhanced buying power: In a seller’s market, a non-contingent offer can stand out, increasing your chances of landing your dream home.
- Sell for up to 10% more: After you move, you can list your old home unoccupied and potentially staged, which can lead to a higher selling price, according to HomeLight transaction data.
For South Carolina homeowners caught in the buy-sell conundrum, HomeLight’s Buy Before You Sell program offers a convenient and stress-reducing solution. Learn more program details at this link.
HomeLight also offers other services for homebuyers and sellers in South Carolina, such as Agent Match to find the top-performing real estate agents in your market, and Simple Sale, a convenient way to receive a no-obligation, all-cash offer to sell your home in as little as 10 days.
You might also try HomeLight’s Net Proceeds Calculator as you plan your home sale.
A creative financing solution for South Carolina homeowners
As South Carolina homeowners face a competitive market, many are exploring bridge loans to make the transition between selling and buying smoother. By borrowing against the equity in your current home, a bridge loan can provide the cash needed for your next purchase, giving you flexibility on timing and helping ease the stress of moving.
While bridge loans can be a helpful option, they can also be expensive and aren’t the best fit for everyone. For a simpler solution, consider HomeLight’s Buy Before You Sell program, which takes the uncertainty out of your next purchase. HomeLight can also connect you with a top South Carolina buyer’s agent experienced in bridge loans, making your next move as seamless as possible.
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