Homeowners typically use one of two refinancing methods to secure funds for a new purchase:
: Instead of a full refinance, you take out a second lien against your home. This provides a flexible line of credit that you only pay interest on when used. refinance current home then buy new
: A short-term loan designed specifically to "bridge" the gap between buying a new home and selling your old one. It allows you to borrow up to 80% of your current home's value to cover the new down payment. Essential Timing & Wait Periods How Soon Can You Refinance a Mortgage? | 2026 Homeowners typically use one of two refinancing methods
Refinancing your current home to buy a new one is a strategic way to leverage existing equity for a down payment or to improve your debt-to-income ratio (DTI) before applying for a new mortgage. However, this path involves strict timing requirements, potential tax impacts, and occupancy clauses that could lead to legal issues if ignored. Core Strategies for Leveraging Equity It allows you to borrow up to 80%
: You replace your current mortgage with a larger one and receive the difference in a lump sum. This cash can then be used as a down payment for the new home.