Bridge Loans: What is a bridge loan?

Bridge Loans allow someone to purchase a new home, using the equity of their current home. The main advantage of bridge loans is that a borrower does not have to sell their current home before they purchase a new home.

Bridge loans are usually good for about 1 year. The assumption is that within that time you will be able to sell your current home to be able to pay off the bridge loan. But if you fail to pay it off in time, you could get stuck paying 2 mortgage payments at the same time.

Are there disadvantages to obtaining bridge loans?

One of the disadvantages of bridge loans is that they are usually high cost loans. You will have to weigh the cost of paying for a bridge loan versus selling your current home to get cash. If you need to get the equity out right away in order to secure a new property, it may be less expensive to get a cash out refinance loan. One of the mortgage sources found on this site will be able to help you find the best deal for home financing. If you would like our personal recommendations for finding the best loans in your area please email us directly at info@about-online-loans.com

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