Bridge Loans in Oklahoma: The Path to ‘Buy Before You Sell’ Using Home Equity

These benefits make a bridge loan a strategic choice for Oklahoma homeowners looking to balance the buy-sell process, using the sale proceeds to settle the bridge loan afterward.

What are the drawbacks of a bridge loan?

Bridge loans can be a powerful tool in your real estate arsenal, but it’s important to weigh their potential downsides before proceeding:

When is a bridge loan a good solution?

A bridge loan can be the perfect financial instrument for certain real estate scenarios in Oklahoma, especially when you find yourself in these situations:

• You require your current home’s equity to fund the down payment for your new home.
• Double moves and temporary housing are impractical or too costly for your situation.
• The home you’ve been eyeing is available now, and you need to act fast to avoid a bidding war.
• Your previous offers have fallen through due to home sale contingencies, and you need a stronger bargaining position.
• You’re convinced that selling your home when it’s empty or after professional staging will yield a better sale price or expedite the sale, but you can’t do this while living there. A bridge loan provides the means to move out and prep your home to shine on the market, maximizing appeal and potential offers.

What’s required to get a bridge loan in Oklahoma?

To secure a bridge loan in Oklahoma, you should be prepared to meet these criteria:

• Qualifying income: Lenders will need to confirm that you can manage payments on your current and new mortgages, as well as the bridge loan.
• Sufficient equity: At least 20% equity in your current home is typically necessary, with some lenders preferring as much as 50%.
• Good credit history: Aim for a credit score above 650 to satisfy most lenders, though the higher your score, the better the terms you may receive.
• Home sale in progress: Some Oklahoma lenders might require proof that your current home is on the market to make sure it will be sold by the end of the bridge loan term.

How much does a bridge loan cost in Oklahoma?

The cost of a bridge loan in Oklahoma can vary, but generally, it’s priced higher than a conventional mortgage. Interest rates for bridge loans are usually 1 to 3 percentage points above the prevailing mortgage rates. This markup reflects the lender’s increased risk, as they’re providing you with the flexibility to purchase a new home before selling your current one.

Remember, if your existing home doesn’t sell within the bridge loan’s term, you’ll be responsible for covering both your mortgage and the bridge loan payments. Ensure your finances can handle this potential burden.

How to reduce bridge loan costs

Securing a bridge loan through the same lender financing your new home may lead to savings. In such cases, redundant charges like underwriting fees might be waived, as both loans undergo a simultaneous underwriting process.

Comparing offers from multiple lenders can also help minimize costs. Keep in mind that bridge loans are temporary, so consider the broader financial picture and the overall convenience each option provides.

Budget for closing costs

Additional costs associated with a bridge loan are unavoidable. Closing costs, typically between 1.5% to 3% of the loan amount, will include various fees:

• Appraisal fee
• Administration fee
• Escrow fee
• Title policy costs
• Notary fee
• Loan origination fee

These costs can add up, so factor them into your overall budget when considering a bridge loan in Oklahoma.

Bridge loan cost example

Below is an example of how much a $100,000 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 Oklahoma house to sell. The new home’s asking price is $200,000. You can only come up with $100,000, but you have at least another $100,000 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.

*These closing costs typically range between 1.5% and 3% 

Who provides bridge loans in Oklahoma?

In Oklahoma, the pool of lenders offering bridge loans might be smaller due to the specific underwriting requirements associated with these loans. If you’re considering a bridge loan, exploring multiple lending options is a prudent step. Here are some common sources where you might find bridge loans:

• Your mortgage lender: This is often the first stop for many borrowers, as these lending institutions offer customer loyalty benefits or streamlined services for existing customers.
• Local banks: They might provide more personalized service and have a better understanding of the local real estate market conditions.
• Credit unions: Membership-based and often offer competitive rates to their members.
• Hard-money lenders: Hard-money lending companies in Oklahoma are typically more flexible with their lending criteria but may charge higher interest rates.
• Non-qualified mortgage lenders: These lenders provide loans that don’t meet the strict criteria of conventional mortgages, which can be useful if you don’t fit traditional lending molds.

Some innovative real estate companies also offer integrated services, including bridge loans, simplifying the process of navigating between buying and selling homes. We’ll explore how such companies can assist you in a later section of this guide.

Are there alternatives to bridge loans in Oklahoma?

While a bridge loan might not work for every Oklahoma homeowner’s unique situation, there are alternatives to consider:

• Home equity loan: This kind of loan, sometimes called an 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 might, however, 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 helps avoid early withdrawal penalties, but 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 Oklahoma. 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.

Together with your Oklahoma 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.

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 Oklahoma:

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.

For Oklahoma 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 Oklahoma, such as Agent Match, which helps you 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 Oklahoma homeowners

As Oklahoma homeowners face the challenges of a competitive housing market, bridge loans emerge as a creative financing solution, offering a smoother transition from selling to buying a home.

By leveraging the equity in your current house, you gain the flexibility to secure your next property without the rush of selling first. This can alleviate the pressure and allow you to wait for the right offer on your home.

However, this convenience comes with a cost and may not align with everyone’s financial situation. It’s essential to weigh the benefits against the potential risks and expenses.

For a more streamlined approach, consider exploring options like HomeLight’s Buy Before You Sell program, which offers a modern take on bridge financing. This program, along with guidance from an experienced Oklahoma buyer’s agent who understands the intricacies of bridge loans, can help you navigate your next home purchase with greater confidence and ease.

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