The Ultimate Guide to Bridge Loans
Sometimes you need to get in a new property before selling your old one and bridge loans can help you afford the overlap. These loans are used to bridge the gap between buying a new place and selling an older one and can help pay for the loans, improvements or even moving costs. Gap lending can help residential buyers, as well as commercial ones, take advantage of the market trends as they happen instead of missing out on opportunities because of financing.
What Is It?
This type of loan is usually taken out with your current property as collateral and can have a higher-than-normal interest rate. Gap financing is also usually taken out for a term of between six and twelve months and can have higher closing costs. One of the ways you can use this type of financing is to pay off the rest of your existing mortgage and use the rest towards a down payment on a new one. This can help you take advantage of the timing of the market instead of waiting until you can save up the money on your own.
How To Get One?
Bridge loans can be secured through both traditional and non-traditional lenders with the right research and documentation. These types of loans can be risky and more expensive than other types of loans. This means doing more research to make sure that you are finding the right lender and the right terms for the financing.
Since each lender will have slightly different qualifications, regulations and documents needed for applying, it is a good idea to know what those are before you start. Most will require a debt-to-income ratio, proof of income and/or a credit check.
Where To Find One?
You can find many lenders offering gap financing, including both banks and private lenders, which gives you more freedom to shop around. You should keep in mind that some lenders will return a decision more quickly than others, meaning that if time is a factor for you, it might be better to go with a non-traditional lender.
Bridge loans can help you cover the gap between purchasing a new property and selling your old one. This can come in handy for both residential and commercial properties, especially if you are on a time crunch to get the deal that you want. You can find both traditional and non-traditional lenders to extend you gap financing. This helps you shop around for the best deal that you qualify for.
