The full explanation
Fannie Mae also calls it a "swing loan." For Fannie Mae to accept that money in a purchase, the bridge loan cannot also be secured by the new home, and the lender must document that you can carry the payments on the new home, the current home, the bridge loan and your other debts at the same time.
An example
The Herreras found a new home but have not sold theirs yet. A bridge loan would give them the money to buy now, but for a while they would have to pay for both homes and the bridge loan at the same time.
You will see it in…
- Lender offers to buy before you sell
- The list of debts the lender reviews in your application
- The new home's closing documents, as the source of funds
