Bridge loans are short-term loans that are people or businesses
that need urgent money till they get a permanent finance for
their venture. A bridge loan is also at times called as swing
loans. These loans are taken for a short period of time and
are required to be paid back quickly. The term of payment usually
varies from six months to one year.
Homebuyers who have decided to buy a house but havent sold
off their present home usually use these loans. These Bridge
of much relevance when there is a rush for houses and the houses
are being sold in days and weeks. With the help of a bridge
loan people can pay off their previous mortgage on the present
house. Besides this the bridge loan can also be used to make
a down payment towards the new house that you plan to buy. A
bridge loan is useful for just anyone who needs some fast cash
terms of the Bridge loans vary
from one lender to another. There are some bridge loans that
would permit the borrower to pay off the full mortgage amount
on the present house. A bridge typically works in a way that
you use the amount to pay off your previous mortgage and whatever
is left is used to pay off the down payment on the new house.
With this type of bridge loan the interest rates for six months
and the closing costs on the loan are deducted from the loan
that is given. In case the first house is not sold within six
months of taking the bridge loan then the borrower has to start
paying the installments towards the interest of the bridge loan.
When the old house is sold then you can pay off the bridge loan
fully without any interest payments.
While you take a bridge loan you should be aware of the fact
that when a bridge loan is taken between two transactions then
it can be costly. The fee on the bridge loan is high and this
makes it very important that the borrower understands the terms
and conditions of the loan before signing for it. The borrower
should also be at times prepared to pay as much as three mortgage
payments, which would include the mortgage on the present house,
the new house and the Bridge loans.
However this condition would be till the time you sell off your
you consider the option of taking a bridge loan you should talk
to your real estate agent and see what he suggests. Get all
the details about the houses in your price ranges that are being
sold. In case the sale of houses is not quick then you can wait
till the time your present house is sold. Taking a bridge loan
is not a great idea.
investing in real estate usually use the bridge loans. People
who are interested in
investing in real estate but do not have the access to traditional
loans can avail these bridge loans. People usually find it difficult
to qualify for traditional loans due to credit problems and
opt for bridge loans. This makes most of the bridge loans available
with the non-traditional lenders. The interest rates on these
loans are also high as much as 15-20%. Lenders for bridge loans
often charge fees or points for these loans. One point is equivalent
to 1% of the loan amount. As the lenders for these Bridge
loans do not bother for the credit rating these loans are
available easily but are expensive.
for Bridge loans can be found easily. Looking for a bridge loan
lender is similar to looking for a traditional home loan lender.
With Internet everything has been made easy and now you can
compare the rates easily over the Internet. With the help of
online lenders you can easily complete the forms and submit
them on the website.
The interest rates on the bridge loans are higher as compared
to any other home loans. While taking a bridge loan you should
not just go in for the first lender whom you come across. Make
sure that you have done enough survey and market research. When
taking these loans you should compare the rates from various
lenders and look at the terms of the loan carefully. Take your
decision after much contemplation and planning. Remember that
initially you might have to make payments towards three loans
but once your house is sold then the payments will be reduced.
The bridge loan should be taken after much contemplation and
research. These loans should be taken only when there is no
alternative left. If you have planned your payments then you
can pay back the loan easily. Be careful about the duration
for payment and also about the terms that have been decided
for making payments. You can easily avail these loans through
the Internet but the laws of borrowing differ according to the
states. You should do much market survey before you decide on
taking these loans.
The bridge loans are an easy alternative to get fast cash. These
loans are approved quickly and do not require any credit check
or collateral. But do keep in mind that you will have to pay
a higher interest rate on these loans. It is always advised
that you should not use a bridge loan unless there is no other
alternative remaining. So think about the options you have and
then apply for these loans.
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