Which type of financing is typically used for the purchase of a new home while waiting for a sale of the applicant's current home?

Interim financing, often referred to as bridge financing, is specifically designed to assist homebuyers in purchasing a new property while they are still in the process of selling their existing home. This type of financing provides short-term loans that help cover the gap between the purchase of the new home and the sale of the old one, ensuring that the buyer can secure their new property without having to wait for the previous home to sell.

This arrangement facilitates a smoother transition for the homeowner, allowing them to move forward with their plans without risking the loss of the new home they wish to purchase due to the lag in selling their current home. The nature of interim financing means it carries a shorter repayment term, which aligns with the temporary need for funds.

In contrast, adjustable financing typically refers to loans where the interest rate can change after a specific period, which doesn’t directly relate to the timing of home sales. Fixed financing refers to loans with a consistent interest rate for the life of the loan, typically used for long-term purchases rather than transitional scenarios. A home equity line of credit allows homeowners to borrow against the equity in their current home but does not address the timing issue of needing funds to buy a new property while awaiting a sale.