How to Apply for a Bridge Loan
With a bridge loan, you are literally bridging the gap between two transactions. Here’s how you do it.
A bridge loan is not just some cute banking term, if that’s even a thing. No, a bridge loan is simply a sum of money lent by a bank or money lender to cover an interval between two transactions, typically the buying of one house and the selling of another. Bridge loans are perfect for investors who have the cash but just need the extra leverage to get them into a cash flowing property.
It’s like an actual bridge…just made of money, that’s all.
How do you know if you need a bridge loan? Great question! To paraphrase Jeff Foxworthy, If…
You found a property for a good price and know you can flip it with little to no work for a great profit.
You may need a bridge loan. If…
You need cash out quickly to buy another property, pay off liens or you just flat-out need cash.
You may need a bridge loan. If…
You have a balloon payment coming and no one is willing to lend to you due to bad credit.
You may need a bridge loan.
*You know you read all of that in a Jeff Foxworthy voice*
A bridge loan is short-term financing used until a person secures permanent financing or removes an existing obligation. That’s why it’s so popular in the real estate industry. For example, homeowners can use bridge loans toward the purchase of a new home while they wait for their current home to sell. A bridge loan can also help you get a leg up over other buyers in a hot housing market. For example, if a seller is interested in a quick sale (because they always are), the seller may be more willing to make a good deal for a buyer who has the money to close quickly.
Also known as interim financing, gap financing, or swing loans, bridge loans bridge the gap during times when financing is needed but not yet available. Bridge loans typically have a faster application, approval, and funding process than traditional loans. But despite this quick infusion of immediate cash, these loans normally come at a higher interest rate than conventional loans. And people who still haven’t paid off their mortgage end up having to make two payments—one for the bridge loan and for the mortgage until the old home is sold.
Basically, if you have solid credit, sound finances, and don’t mind paying some additional fees, then a bridge loan is right for you, as it allows for faster financing, and more purchasing flexibility. It’s perfect if you…
*are in a seller’s market in which houses sell quickly.
*can’t afford a down payment on the new property without first selling your current home.
*want to close on a new home before selling your current home.
*want to purchase a property but the seller won’t accept an offer contingent on the sale of your current home.
*aren’t scheduled to close on the sale of your current home before closing on the new house.
The big thing to remember when looking to apply for a bridge loan is to work with a money lender who you trust and who can make the entire bridge loan process as painless as possible. And The Loan Guys do just that, as they offer…
*one to two-year bridge loan programs
*620 minimum credit score
*purchase, refinance or cash out options
*75% Loan-to-value
*interest only payments
*rates starting at 7.49%
*no income verification, no w-2s, no tax returns required
*75k -2MM loan amounts
*no prepayment penalty
Bridging any gap can be a tricky process, especially when it comes to real estate and property investment opportunities. Sometimes you need a little help getting over, and that’s where a bridge loan comes in. Wow… that name really is perfect, isn’t it?
