Do you want to buy a house you saw on the market, but aren’t sure you’ll be able to sell your current home on time before the house is off the market? Then a bridge loan might be the perfect solution. Not all homeowners are aware that bridge loans exist, and they could help you depending on your situation. Let’s take a closer look at what bridge loans are exactly and why you should consider getting one. Daymond On Demand Reviews highlights important things you need to know.
What are Bridge Loans?
A bridge loan is a form of temporary loan that will usually be used to pay the down payment for a new home using your current home as a collateral. When it comes to bridge commercial real estate loans, collateral could come in the form of inventory or equipment as well. These types of loans are short term and will usually be paid off once one of the obligations are removed or you secure permanent financing. These loans usually don’t exceed one year and also tend to have slightly higher interest rates. Now let’s take a look at some of the benefits bridge loans have to offer.
They Allow You to Buy Time
One of the best things about bridge financing is that you don’t have to rush the moving process. This is especially great if you’re moving out of state and you have to wait for the end of the school year before you make a move for instance.
If you’re a business, getting a bridge loan is a great way to postpone moving until the end of the high season while zeroing in on a new location. This will ensure that your operations go uninterrupted and that you have the time to prepare your clients for the move.
They Allow You to Use Your Home as Equity
A lot of people will choose to use their 401k or their “rainy day” money to make a down payment on their new homes. With a bridge loan, you don’t have to and can simply use the power of equity to your advantage.
You Can Choose Repayment Options
Another great thing about bridge loans is the flexible repayment options they offer. You don’t have to repay the whole sum immediately once you secure permanent financing. You can decide to pay in increments, which can help you improve your credit score. And if you decide to repay the whole sum immediately, some of that money will go towards the off-the-bridge loan.
You Won’t Have to Pay Two Separate Payments
That’s right. With a bridge loan, you won’t have to make payments on your current home since it was bridged behind the second one. However, you’ll have six months to make a sale on your current property, so be aware of that.
As you can see, a bridge loan might be exactly the solution you need and a great way to get the property you want without having to expedite the moving process.