How to Use a Bridge Loan For Your Next Property Acquisition
Here’s a common problem for real estate purchasers. They see a property they covet, but they have all their capital tied up in an existing piece of real estate. Fortunately, there is a solution to this dilemma. It is called a bridge loan.
Using a Bridge Loan for Property Purchase
A bridge loan is a short-term method of financing used specifically to “bridge” the gap between buying a piece of real estate and selling the one you already own. It can be used for residential property or commercial real estate.
The Pros of Utilizing a Bridge Loan
There are several situations in which a bridge loan may be an ideal solution:
• Avoid Excess Fees. The cash obtained from a bridge loan will likely enable you to put well over 20 percent down on the property, which can free you from having to purchase private mortgage insurance
• Obtain Rapid Financing. Bridge loans are often obtained more quickly than other loan types.
• Beat your Competition in a Sellers Market. By having your capital available, your application may be seen as more competitive than those of other potential buyers.
The Cons of Taking on a Bridge Loan
Before taking out a bridge loan, carefully think about the following and how they may affect your financial situation:
• Interest Rates. Bridge loans can carry higher interest rates than other loan types. Be sure to understand the exact rates you will be paying.
• Overall Cost. Always keep in mind that a bridge loan, like other loans, carries an overall cost that adds to your total outlay for acquiring your new property
• More than One Loan. Once the bridge loan is obtained, you may be paying on several loans if the existing property you wish to sell is also financed.
Contact Green Apple Funding
Here at Green Apple Funding, we offer a wide variety of financing solutions. We’d like to introduce you to your options when purchasing real estate or for other financial needs. Give us a call today to learn more.