- Loan programs
If you are a homeowner looking to sell your home, but there is no buyer in sight, then a bridge loan might be the perfect solution for you! This blog will take a more in-depth look at what a bridge loan is, how it can be helpful in a seller's market and how the financing process works!
A bridge loan is a type of temporary financing that you can use for various purposes. The name comes from the idea that this type of loan bridges the gap between one's current situation and their desired situation.
With a bridge, loan homeowners can borrow up to 80% of the overall value of their current home and the home that they will move into.
A bridge loan in real estate can be used to buy another home before you sell your current one. A bridge loan essentially helps fund your new home purchase. This is especially helpful when there is a seller's market, and you know that it will take a while before you can move into your new home.
A seller's market is a real estate term used to describe a market where there is a high demand for housing that is met with a limited supply due to a lack of available properties
Buyers in a seller's market are not flexible about their price and instead prefer to win on contingencies or make other concessions. This is where a bridge loan can come in handy for those looking to sell in a challenging market. Using a bridge loan can get you a leg up over other buyers when the housing market is hot.
If a seller is interested in a quick sale, they would be more willing to make a good deal for a buyer who they know will have the money once they sell their property, which enables them to close the deal quickly.
As a short-term loan, bridge loans typically last an average of 6 months to 1 year. Most people pay off their bridge loan with the money they get from selling their current home. Terms and conditions and fees can vary between lenders; some ask for a balloon payment to be paid when the bridge loan ends, others are designed to pay off your first mortgage at the time the bridge loan closes.
We hope this article has helped break down what a bridge loan is, how it works, and some widespread use cases where a bridge loan can save your life. If you are looking to sell your property in a tough market, we have referral agents that we can recommend and a team of experts who can help you get started on your bridge loan. Interested in learning more? Call us today!