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Understanding the type of loan you're getting matters, to protect your financial interests. You also need to know when to choose one type of loan over another. So, should you choose a bridge loan? When might that be the best choice for getting into the home of your dreams? Here's what you need to know about this particular loan type.
What Are Bridge Loans?
Bridge loans typically provide temporary home financing, and are designed for use for six to 12 months. They carry an interest rate that is approximately two percent higher than a standard mortgage. These loans can "bridge" the gap between buying one property and selling another, allowing the borrower to get into a different home before their original home is sold and closed.
Who Can Receive a Loan Like This?
Anyone who owns a home and is trying to buy another one could potentially get a bridge loan. Just as with a traditional mortgage, though, you would have to qualify. Income and equity requirements must be met. There is also usually a debt-to-income ratio that's very important, since you'll have to make loan payments for a few months.
Why Would Someone Want a Bridge Loan?
When you're selling your home but you haven't found a buyer yet, you might find another home you want to buy. Since you don't have the funds from the sale of your current home, you wouldn't normally qualify to buy the other home. If you can get a bridge loan, though, you can buy the second home while still trying to sell the first one. When the first one sells and you receive the proceeds, you can use that money to pay off the bridge loan. Bridging that gap between the financing for the two homes can be vital in markets where housing is very competitive, or where you need to move quickly to purchase a particular home.
How to Get This Type of Loan
Getting a bridge loan involves talking to your bank or other lender, just like you would with another type of loan. Not all lenders offer bridge loans, so it's important to shop around. Additionally, your real estate agent can be a great resource when it comes to finding a bridge loan. Some agents even partner with lenders for these kinds of loans, to give their clients more options.
If you're not sure whether a bridge loan is the right choice for your home buying and selling needs, talking to your lender and real estate agent can help. There are times when borrowing additional money isn't a good choice, but these kinds of loans can also be very beneficial in certain real estate circumstances.
About the Author
Tina Broyles, DRE 01009212 & NMLS 91630
Headline: Tina Broyles: Your Expert Real Estate Agent for Fremont, San Jose, and the Bay Area | eXp Realty
Bio:
As a dedicated real estate professional and a long-time resident of the California Bay Area, I have been proudly serving the real estate community since 1987. My mission is to provide my clients with unparalleled professionalism, in-depth market knowledge, and a caring approach that has resulted in a business built almost entirely on referrals.
Your Trusted Real Estate Advisor in the Bay Area
I specialize in the vibrant and diverse real estate markets of Fremont, Campbell, San Jose, Saratoga, Cupertino, Sunnyvale, Morgan Hill, Santa Clara, Mountain View, and Milpitas, CA. With over three decades of experience, I have a deep understanding of these communities and can provide you with the insights you need to make informed decisions.
One of the most consistent compliments I receive from clients is about my responsiveness to their needs. Your goals are my top priority, and I am committed to being there for you every step of the way. I am honored to have been voted "Best of Milpitas" every year from 2000 to 2020, a testament to my dedication to my clients and my community.
About My Business: eXp Realty
As part of the innovative eXp Realty team, I bring a diverse set of skills and a commitment to excellence to every transaction. We leverage cutting-edge technology that is "beyond expectation" to provide you with a seamless and efficient real estate experience. My team and I offer the perfect balance of experience and professionalism to help you achieve your real estate dreams in the Bay Area.
Community Involvement
I believe in giving back to the community that has given me so much. I am a happily married mother of two and a proud grandmother to two beautiful granddaughters, Audrina and Chesney. In my free time, I enjoy golfing, exercising, and my weekly Bible study. I am also passionate about serving the homeless community in Milpitas and supporting our local businesses.
I would be honored to get to know you and your family and put my extensive real estate experience to work for you.
Credentials:
