We are about to upgrade to a larger home soon (next few months depending upon what we find) and I'm looking into mortgage options.

I've read a little about bridge loans and see their purpose, but the additional fees seem high from what I've read. I decided to apply for a home equity line of credit a month ago and I've been approved.

I've got the funds to cover my 20% down payment, but we would be cutting it close on on cash reserves. Especially if our current home doesn't sell. (It should sell quick since we are in a rather hot market and have a smaller home in a desired area).

So, knowing that we just need a $30,000-50,000 security net for peace of mind, what would y'all recommend? I know you'd need more info on rates and such, and I'll get that on Monday.

I've talked with WellsFargo already and their Jumbo loan rates are actually better then their conventional rate. Not true at other banks/lenders I spoke with. Other lenders are recommending that I take out 2 loans to keep it from being a jumbo loan. I'm 'assuming' closing cost for loan #1 and closing cost/1% origination fees for loan#2 (being the bridge loan), will be more then the WF jumbo loan utilizing my HELOC

What are y'alls thoughts? Anyone been down this road recently?
TIA!!

I'll assume the HELOC has no closing costs. Since you only pay interest if you actually draw on the line it seems most flexible for you.

Yes, that is correct. No closing cost and I'd pay it off in full within the first 20-30 days most likely.

Why would a bank intentionally lose money on a 30 day HELOC? It takes a lot of money in just Title costs to make that a money loser. Something is not right here in this scenario.

Good question
My guess would be because they want my business on the larger mortgage loan.

Fair enough. I can do a bridge loan aka a HELOC for appraisal and title costs.

Last I checked banks do not lose money just to do so.

Banks look at the bigger picture. The relationship the long term mortgage helps build is worth the acquisition cost.

Why wouldn't you try a contingency contract on the larger home? Then you only have to do the loan on the purchase?

We've thought about it. I just didn't want that to be the main route we took if that perfect house were to become available and we were bidding against multiple buyers.

You're a much stronger buyer without the contingency and it sounds as if you have thought this out well.

I would suggest shopping those rates if you're in the jumbo space. Most of those loans are portfolio or laid off to specific investors and as such there is much more rate difference than there is with conforming loans.