Bridge loans sound like some unusual type of financial product. In fact, they are highly useful and practical for many folks, particularly when looking to buy real estate.
Bridge Loans Defined
A bridge connects one piece of land to another. A bridge loan is similar, in that it provides funding for a new property until a previous one has been sold. In essence, it “bridges the gap” in funding until the proceeds of the yet-to-be-sold property are realized.
They are most commonly used when someone finds themselves trying to buy a new home or other property while simultaneously selling an old one. Here’s but one typical situation: A man lands a new job in another city, wants to buy a home for his family, and needs to sell his existing home, which he no longer needs, to pay for the new residence.
Bridge Loans FAQS
- What are the main benefits of bridge loans? A bridge loan can enable you to place a contingency-free offer on a new property. Additionally, as mentioned, it can be very important if you need to move from one property to another in a short period of time.
- Who can obtain a bridge loan? Many people who have excellent credit can obtain a bridge loan. You generally need a high amount of equity in the property you already own and are trying to sell.
- What are the disadvantages of bridge loans? Bridge loans can carry higher interest rates than some other loan types. Also, bridge loans are short-term financial products and need to be paid back sooner than other proper loan types.
How You Can Obtain a Bridge Loan
Obtaining a bridge loan can be an excellent solution for many. If you need a bridge loan, be sure to connect with Array Financial. We are experts in property financing and can help you obtain the funding that you need. Give us a call today.