Are you in the process of selling your current home while you are shopping for your next one? If so, you might find yourself in need of a short-term loan referred to as a bridge loan.
A bridge loan is a hard money loan which you take out in order to obtain the financing you need for a down payment on a new home. The reason you might not have that money available to you now is that it could be tied up in your current residence, which you still have not sold.
While you could wait until the sale of your current residence is completed in order to put a down payment on your new home, another buyer could get in ahead of you and purchase the property you want.
With a bridge loan, you can prevent this from happening. Your current home secures the bridge loan, and the bridge loan lets you move immediately on your next home. Once your current home sells, you simply pay off the bridge loan.
Bridge loans are not optimal for every situation, but for those for which they are ideal, they offer the following excellent benefits:
Firstly and most importantly, a bridge loan gives you freedom. Without one, you might have to pass on the home which you dream of making your own—even though you can afford it. With the bridge loan, that home and future can become yours.
A bridge loan allows you to take control of the timing of your real estate transactions. You can make your down payment when it suits you instead of waiting. If you wish, you can also delay the sale of your current home until you find the buyer willing to make you the most competitive offer.
Your bargaining power increases with a bridge loan on your side. Asking a buyer to hold a home for you until your house sells is not going to go over well. Just knowing you have a bridge loan and can make an immediate down payment can move a seller in your favor.
When you are moving from one home to another, that is a time when you will be juggling a lot of financial transactions. In order to reduce stress on your finances during that time period, your bridge loan might include a grace period before payments are due.
You should be able to negotiate for a repayment option which will fit with your needs.
Barrett Financial Group LLC is an Equal Housing Lender. As prohibited by federal law, we do not engage in business practices that discriminate on the basis of race, color, religion, national origin, sex, marital status, age, because all or part of your income may be derived from any public assistance program, or because you have, in good faith, exercised any right under the Consumer Credit Protection Act. Disclaimer: Programs subject to change without notice. All borrowers must qualify per program guidelines.