Details on Rocket Mortgage Buy Now, Sell Later Bridge Loan

Rocket bridge loans let you tap existing home equity for down payment on new home (and to fix up your place to sell), and the interest-only payments don't hit your pre-approval on the new home.

Rocket has a new bridge loan that lets you tap your existing home equity for down payment on new home, and to fix up your place to sell. And most important: the interest-only payments don’t hit your pre-approval on the new home. Here are some details:

– The Rocket bridge loan is a loan on your existing home so that you can fix up your place to sell, and have money for a down payment on a new home purchase.

– To qualify, your home needs to be listed for sale, or under contract.

– You also must use Rocket to finance the purchase of your new home.

– By using Rocket for the bridge loan AND the new purchase loan, Rocket won’t hit you for obligations on the bridge loan when approving you for the new loan for your next home.*

– The bridge loan cap is $500,000 with a 9% interest-only payments for 6 months.

– And if your home is listed already (which is required), the place will likely sell during that time (since it has to be listed or under contract to get the loan), and you are closing on your new home during that time.

– Rocket is launching this with their centralized retail operations, and may expand it out to their broker network soon.

It’s worth noting that bridge loans aren’t a new concept.

I did bridge loans as standard practice for years in San Francisco’s all-the-time-bidding-war market.*

And many other lenders offer bridge loans. There also proptech and lender startups doing similar concepts.

But it’s important that Rocket putting their weight behind bridge loans to make them mainstream as bidding wars have become a national phenomenon.

This solves for the issue of only needing to move once, and having the cash you need to make a compelling offer on the new home.

Compelling offers matter — ones that close fast and without surprises — when presenting offers to sellers who are looking at multiple offers.

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Reference:

– Rocket Mortgage Bridge Loans Help You Buy New Home Before Selling Existing Home

* The way we used to underwrite the new purchase loan when we’d be doing a bridge loan is that we wouldn’t hit borrower for any obligations at all on the outgoing property. We’d approve them based on new property obligations only. I haven’t verified with Rocket yet if they’re doing in this way yet (hence only noting they don’t hit you for bridge loan payment above). So if anyone knows, please let me know, and I’ll update this post.