Bridge loans, which are also commonly referred to as interim financing, gap financing or swing loans, help a motivated home buyer to secure financing before their home or investment property sells. Lenders can usually modify these flexible loans to accommodate a person’s unique needs.
Current real estate market conditions allow savvy investors to make big profits as long as they can move quickly on good opportunities. Low inventories of existing homes and slower than normal construction developments have combined to drive the median home price across the US to $223,900. This represents a 7.6% national average increase through 2018. Market experts expect prices to rise by another 6.3% over the next 12 months which may present very good opportunities for home buyers.
Bridge loans are a short-term funding solution with some unique features.
- They usually include payback terms between 2 months to 1 year.
- Most bridge loan options gain approval in about 15 days.
- May receive up to 70% of the property’s value in the loan.
Bridge loans are a tool real estate investors can use to increase their holdings in this hot market. How can these funds be used to help you make more money from your properties?
- When prime properties come up for sale, investors need to be ready to take advantage. If most of your cash is already tied up in other properties, a bridge loan is a perfect way to get the quick cash you need to win the bid.
- While a property is up for sale, investors can use bridge loans to continue financing new projects. When the sale is complete, the funds can be used to pay off the bridge loan.
- Hard money loans are a popular option for real estate investors who can’t wait for the normal bank loan process. However, these funds usually come with higher interest rates. Bridge loans are a lower cost alternative, as lenders generally charge less interest for these accounts.
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