More On Hard Money Bridge Loans
One of the toughest aspects of moving is trying to sell one house while buying another. A bridge mortgage is designed to help you coordinate between these two transactions. If you buy a new house before your old one is sold, you may well be stretched to come up with the ready cash for a down payment and closing costs. On the other hand, if you sell first and then look to buy, you may be left without a residence in between -- thus incurring the added upheaval and expense of finding temporary housing.
How Hard Money Bridge Loans Work
As the name suggests, a hard money bridge loan is designed to get the borrower across a specific gap in time--i.e., the gap between when one expense is due, and another source of capital is received. Bridge loan financing is common in business, but hard money bridge loans makes perfect sense to anyone who has tried to sell one house while buying another.
If the case of a bridge loan, you would use the home equity in your current house as collateral for a bridge loan. This bridge loan could then be applied to the down payment and closing costs on your new home. The bridge loan would typically be for a term of a year or less, giving you extra time to sell your existing home.
Pros And Cons of Hard Money Bridge Loans
Mortgage bridge loans are often the only solution to a timing problem, but it is not a cost-free solution. This additional loan means another set of interest and closing costs, and bridge loan rates are relatively high for short-term loans. Even so, if a bridge mortgage is the only way to facilitate your move, you may deem these costs well worth it.
California Bridge Loan Rates & Lenders
California bridge loans will typically carry higher interest rates and up front points than most bank loans. Oftentimes, a bridge mortgage lender is a private lender who can supply a loan quickly; the major concern of a borrower in need of a bridge loan. Due to this fact, private California bridge lenders can charge higher loan rates and points. Hard money bridge loan terms can be set up to pay off a home or other project's existing debt, while other deal add the new debt obligation to the previous California mortgage loan.
Hard money bridge loans typically carry high interest rates and up front points than bank loans. They are made through a private lender who can supply the loan very quickly, thereby satisfying the borrowers primary need -- cash now. Because of this, as well as the riskier loan scenario, a private hard money lender is justified in charging higher loan rates and points. Terms of a bridge loan can vary widely. They may be structured to completely pay off a project's existing debt, while others pile the new debt on top of the old.
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