Bridge Loans in Colorado Springs: How to Unlock Home Equity to Buy Before You Sell
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Cheyenne Wiseman Associate EditorClose
Cheyenne Wiseman Associate EditorCheyenne Wiseman is an Associate Editor at HomeLight.com. Previously, she worked as a writer for Static Media (Mashed.com and Chowhound.com) and as an editor for CBR.com. Cheyenne holds a bachelor’s degree in English from UC Davis, where she also founded and led a literary magazine called Open Ceilings. She has four years of experience writing and editing on topics including real estate, financial advising, and pharmaceuticals.
Selling your current home while buying another can feel like a delicate juggling act. Coordinating both transactions at the right time, particularly in a competitive market like Colorado Springs, can add a lot of pressure to an already busy move.
When housing inventory is limited and home prices remain elevated, it may seem like your only choice is to sell first and move into temporary housing while you search for your next home. But moving twice isn’t always ideal. Fortunately, there’s another path to consider.
A bridge loan can help you purchase your next home before your current one sells. This short-term financing solution can provide greater flexibility and more control over your moving timeline. In this guide, we’ll walk you through everything you need to know about bridge loans in Colorado Springs.
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.
What is a bridge loan, in simple words?
A bridge loan is a short-term financing option that helps you buy a new home before selling your current one. It allows you to tap into the equity you’ve built in your existing home to access funds for a down payment, closing costs, or other expenses related to your next purchase.
Because bridge loans are designed to provide quick access to funds and greater flexibility, they often come with higher costs than a traditional mortgage. For many Colorado Springs homeowners, however, that tradeoff can be worthwhile if it helps them avoid a rushed sale or the inconvenience of temporary housing.
You may also hear bridge loans referred to as:
- bridge financing
- bridging loan
- interim financing
- gap financing
- swing loans
How does a bridge loan work in Colorado Springs?
One common scenario is finding your next home before your current one has sold. In that case, a bridge loan can allow you to use the equity in your existing home to cover the down payment and closing costs on the new property.
In many cases, the lender providing your new mortgage may also offer a bridge loan. Lenders often require your current home to be listed for sale and typically structure bridge loans with terms ranging from six months to one year.
As part of the approval process, the lender may evaluate your debt-to-income ratio using your current mortgage payment, proposed new mortgage payment, and any bridge loan obligations.
However, if your existing home is already under contract and the buyer has secured final loan approval, the lender may only consider your new mortgage payment. This can help reduce risk and demonstrate that you’ll be able to manage your finances if your current home takes longer than expected to close.
What are the benefits of a bridge loan in Colorado Springs?
A bridge loan can offer several advantages when you’re buying and selling at the same time in Colorado Springs:
- Make a stronger offer: You may be able to submit a non-contingent offer, which can be more attractive to sellers.
- Move only once: Avoid the cost and inconvenience of temporary housing, storage units, and multiple moves.
- Prepare your current home more easily: Move into your new home first, then focus on staging, repairs, and showings.
- Potentially delay payments: Some bridge loan programs don’t require monthly payments until your current home sells.
- Act quickly when the right home becomes available: You can pursue a purchase without waiting for your existing home to close.
What are the drawbacks of a bridge loan?
While a bridge loan can increase your flexibility and relieve some pressure during a buy-sell move, there are still a few drawbacks to consider.
- Additional costs: You may pay origination fees, underwriting fees, and other closing costs.
- Greater financial obligations: Depending on timing, you could be responsible for two mortgage payments and a bridge loan simultaneously.
- Stricter qualification requirements: Lenders often have higher standards for credit, income, and equity.
- A more involved approval process: Underwriting may take longer than you expect, particularly if multiple properties are involved.
When is a bridge loan a good solution?
A bridge loan isn’t the right fit for every homeowner, but it can be especially useful in situations such as:
- You need the equity from your current home to fund the down payment on your next home.
- You want to avoid the expense of a double move or temporary housing.
- Your ideal home has come on the market, and you need to act quickly.
- Sellers have been reluctant to accept offers with a home sale contingency.
- You’d prefer to move out before preparing, staging, or showing your current home.
What’s required to get a bridge loan in Colorado Springs?
While requirements vary by lender, you’ll typically need:
- Qualifying income: Lenders will verify that you can handle your existing mortgage, new mortgage, and bridge loan obligations.
- Sufficient home equity: Many lenders require at least 20% equity in your current home, though some may require more.
- Strong credit: A credit score of 650 or higher is often preferred and may help you secure more favorable terms.
- A home that’s listed for sale: Some lenders require proof that your current property is actively on the market before approving a bridge loan.
How much does a bridge loan cost in Colorado Springs?
Below is an example of how much a $300,000 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 Colorado Springs house to sell. The new home’s asking price is $500,000. You can only come up with $200,000, but you have at least another $300,000 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 | $300,000 | $300,000 |
| Interest (varies) | 10% (example for 6 months) | $15,000 |
| Origination fee | 1.5% | $4,500 |
| Underwriting fee | $1,000 | $1,000 |
| Appraisal fee | $700 | $700 |
| Closing cost* | 2% | $6,000 |
| Total repayable amount | $327,200 |
*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 Colorado Springs?
Due to the underwriting demands for this type of loan, few institutions in Colorado Springs offer bridge loan products. Curious borrowers may want to check with several different lenders before applying. The most common sources include:
- Your mortgage lender
- Local banks
- Credit unions
- Hard-money lenders
- Non-qualified mortgage (non-QM) lenders
Are there alternatives to bridge loans in Colorado Springs?
A bridge loan isn’t the right fit for every Colorado Springs homeowner. Fortunately, there are several other financing options worth considering:
- Home equity loan: Often called a HEL, this loan allows you to borrow against the equity in your home using the property as collateral. While the interest rate may be higher than the rate on your existing mortgage, you can access the funds you need without refinancing your entire loan and giving up a lower rate.
- Home equity line of credit (HELOC): A HELOC lets you borrow against your home’s equity through a revolving line of credit. Instead of receiving a lump sum, you can draw funds as needed, often at relatively competitive rates. Keep in mind that HELOCs typically have variable interest rates, and some lenders may charge an early closure fee if the account is closed shortly after opening.
- Cash-out refinance: With a cash-out refinance, you replace your existing mortgage with a larger loan and receive the difference in cash. Interest rates are generally lower than bridge loan rates, but this option may not work for everyone. For example, owner-occupancy rules can limit how quickly you can obtain a new owner-occupied mortgage after refinancing.
- 80-10-10 (piggyback) loan: This financing strategy, sometimes called a piggyback loan, combines a first mortgage and a second mortgage to help fund a new home purchase with just 10% down. It can help buyers avoid private mortgage insurance, but you’ll still be responsible for multiple loan payments until your current home sells and the second mortgage is paid off.
- 401(k) loan: If your retirement plan permits it, you may be able to borrow up to $50,000 from your 401(k) to help fund your next purchase. Repayment periods are typically short — often five years or less — which can result in higher monthly payments that may affect your mortgage qualification.
Are there modern ways to buy a house before I sell?
Today, companies such as HomeLight offer programs designed to simplify the process of buying and selling a home at the same time. These “Buy Before You Sell” programs incorporate bridge-style financing solutions that can help homeowners move forward with greater flexibility and less stress.
Working alongside your Colorado Springs real estate agent, HomeLight’s Buy Before You Sell program can help you access your existing home equity so you can purchase your next home before selling your current one. Check with your agent to see whether the program is available in your area.
Other companies offering similar home trade-in or buy-before-you-sell programs include Knock, Orchard, Flyhomes, and Homeward.
How does HomeLight Buy Before You Sell work?
Here’s an overview of how HomeLight’s Buy Before You Sell program works for Colorado Springs homeowners:
- Apply with no obligation: Find out whether your home qualifies and receive an approved equity unlock amount, often within 24 hours. There is no cost or commitment to apply.
- Buy your next home with confidence: Once approved, you’ll gain access to a portion of your home’s equity, allowing you to make a competitive offer without a home sale contingency. HomeLight’s Equity Unlock Calculator can help estimate how much equity may be available.
- Sell your current home after you move: Once you’ve moved into your new home, your previous property can be listed vacant, making it easier to prepare, stage, and show to potential buyers. After the sale closes, you’ll receive the remaining equity from the transaction.
Benefits of HomeLight Buy Before You Sell
- Greater flexibility: You won’t need to perfectly coordinate your sale and purchase timelines, giving you more room to plan your move.
- Less financial pressure: The program can help reduce concerns about carrying two homes or dipping into savings while transitioning between properties.
- Stronger buying position: In a seller’s market, a non-contingent offer can stand out, increasing your chances of landing your dream home.
- Potential for a higher sale price: According to HomeLight transaction data, selling an unoccupied and potentially staged home may help sellers achieve a stronger final price.
For Colorado Springs homeowners trying to balance a home purchase and sale at the same time, Buy Before You Sell can offer a more convenient and less stressful path forward.
HomeLight also provides additional services, including Agent Match, which connects buyers and sellers with top-performing local agents, and Simple Sale, which can provide a no-obligation cash offer for your home in as little as 7 days.
You may also find HomeLight’s Net Proceeds Calculator helpful when estimating the financial outcome of your sale.
A creative financing solution for Colorado Springs homeowners
As competition and home prices continue to challenge buyers in Colorado Springs, many homeowners are looking for ways to purchase their next home before selling their current one.
A bridge loan can provide access to your existing equity and give you more time to sell without feeling pressured by tight deadlines. However, bridge loans come with added costs and may not be the right solution for every situation.
Programs such as HomeLight’s Buy Before You Sell offer another option worth considering. They can help simplify the transition while giving you greater flexibility throughout the process. HomeLight can also connect you with a top-performing Colorado Springs agent who has experience helping buyers and sellers evaluate bridge loans and other financing strategies.
Editor’s note: 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 Colorado Springs, HomeLight encourages you to reach out to your own advisor.
Header Image Source: (Kevin Bree/Unsplash)
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