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Bridge loans
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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 loans are 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 on time. The 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 present house. Before 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. People 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. Lenders 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. Other Articles |
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