How Long Does It Take to Get a Bridge Loan?

A bridge loan is a short-term financing option that helps homebuyers transition between selling an existing home and buying a new one. It acts as a “bridge” to span the gap during this process. But how long does it actually take to get approved for a bridge loan and receive funding? The timeline can vary quite a bit depending on your lender, loan program, and individual circumstances.

Overview of Bridge Loans

First, let’s review what bridge loans are and how they work. A bridge loan is secured by the equity in your current home as collateral. It provides funds that you can use for a down payment and closing costs on a new home purchase before you sell your existing house.

Bridge loans are generally designed to be paid back within 6-12 months. Once you sell your old home you use those proceeds to pay off the bridge loan. These types of loans come with higher interest rates and fees compared to traditional mortgages.

General Timeline

The time it takes to actually get bridge loan funds can range anywhere from 2-8 weeks in most cases. Here is a general overview of the typical bridge loan timeline:

• 1-2 weeks – Application submission and initial underwriting
• 1 week – Home appraisal
• 1-2 weeks – Final underwriting and approval
• 1-2 weeks – Closing and funding

However, this is just a rough estimate. The actual timeline varies per lender and situation Factors that can speed up or slow down the process include

Lender

Some lenders are able to process bridge loans faster than others. Smaller lenders and mortgage brokers may be more nimble. Large banks tend to have more rigid procedures. Shop around for quotes to find the right lender for your timeline.

Loan program

Bridge loans come in many shapes and sizes. Some are standardized conventional programs while others are more custom tailored. The more non-traditional the loan, the longer underwriting will likely take.

Your financial profile

Borrowers with pristine credit, high income, and low debt get approved quicker. If your credit score is damaged or income is harder to document, it may require more time.

Collateral property

If your home needs an appraisal waiver or full appraisal, it can add days or weeks to the timeline. How quickly the appraisal can be scheduled and completed will vary.

Your real estate market

In hot markets where homes sell rapidly, lenders may rush bridge loans through. In slower markets where loans carry more risk, they tend to be more cautious.

Overall demand

During high volume seasons, lenders have more loans to underwrite, delaying timelines. Refinancing booms can overwhelm lenders and extend time to close loans.

As you can see, many variables impact bridge loan timelines. The best way to get an accurate estimate is to ask potential lenders. Be sure to factor extra time into your calculations. It’s better to be pleasantly surprised with an early closing than have your real estate transaction fall through due to delays.

Steps in the Bridge Loan Process

Now let’s take a more detailed look at the typical steps involved in obtaining a bridge loan and how long each takes:

1. Application – 1-2 weeks

You’ll start by completing a bridge loan application either directly through a lender or with the help of a mortgage broker. This will require:

• Detailed personal financial information
• Income and asset documentation
• Details on the collateral property
• Info on the new home you intend to purchase

The lender will then do an initial underwriting assessment to determine if you may qualify. This step usually takes anywhere from a few days to a couple weeks.

2. Home appraisal – 1 week

The lender will order a home appraisal on your current residence which will be used as collateral for the bridge loan. Appraisals typically take about 5-7 business days to be completed and submitted.

However, it can occasionally take longer during periods of high demand. If the appraisal comes back low, you may need to go through the process again to get a second valuation.

3. Final underwriting – 1-2 weeks

Next, the lender will conduct a comprehensive review of your full application and home appraisal to make a final bridge loan eligibility determination. This involves evaluating:

• Debt-to-income ratio
• Credit history
• Property value
• Employment and income verification
• Assets and reserves
• Other factors

Barring any issues that require further documentation, this last underwriting clearance shouldn’t take more than 1-2 weeks.

4. Closing and funding – 1-2 weeks

Once finally approved, you’ll receive a closing disclosure outlining the costs, fees, and loan details 3 business days before closing. This gives you a chance to review everything before signing the final paperwork.

The closing itself when you sign documents usually takes 1-2 hours. After that, the lender disperses the funds, which typically happens within 1-2 weeks of closing.

And that completes the process! From start to funded loan, most bridge loans take 4-8 weeks if all goes smoothly. Being flexible on lenders and loan programs can help speed things up in a time crunch.

Tips for a Faster Process

If you need to obtain a bridge loan within a tighter timeframe, there are some things you can do to help expedite the process:

• Shop with lenders that advertise accelerated bridge loan closings.
• Get pre-approved so the lender has your info ready when you find a home.
• Opt for a conventional bridge loan program rather than a custom product.
• Ensure you submit organized application documents upfront.
• Order appraisal and inspections as soon as possible.
• Stay in close contact with your loan officer to handle any issues quickly.
• Be ready to provide extra documentation or clarification if needed.
• Don’t make any major financial moves while underwriting is underway.

While there’s only so much you can do to control external factors, taking these steps gives you the best shot at securing your bridge loan as quickly as possible.

Weighing Bridge Loan Timelines

Bridge loans allow you flexibility and options during the home buying process. But their shorter-term nature means you take on some risk if your current home doesn’t sell within the loan’s payback period.

Carefully consider potential delays and your confidence in selling within the lender’s required timeline before committing. You don’t want to end up overextended on two mortgages.

Ideally, get estimates from multiple lenders to find one that can meet your needs and schedule. While it takes some effort, bridge loans enable you to move forward and compete with flexible funding in the timeframe you require. With the right planning and preparations, you can receive approval and money in hand within as little as 2-8 weeks in most cases.