Planning's a must on bridge loan

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Q:My wife and I are in the beginning stages in the home search process. We currently own

a home with about $200,000 in equity in it.

Our plan is to sell our home and use most of the equity for a large down payment.

Here's where we disagree: We need to do some work on our house before we put it on the market, which will be in about a month.

I want to start looking for the right house now, and if we find it, get a bridge loan to cover the down payment until our current house sells.

My wife thinks bridge loans are risky and that we should wait until our house is under contract before we start to seriously look for the new home.

I don't think we should box ourselves in a time frame.

What's your opinion of bridge loans?

A: A bridge loan is a short-term loan designed to solve your exact dilemma. Clearly, there are pros and cons to a bridge loan. Let's take a look.

First, it enables the buyer of a new home to enter into a contract to purchase a home that's not contingent upon the sale of the existing home. A noncontingent offer greatly strengthens your negotiating power because the deal doesn't rely on an outside event.