Bridge loans, sometimes called Hard Money loans, are an option when traditional financing programs aren’t available to a buyer. As these loans are typically the avenue of last resort, the terms are less favorable than traditional financing. These types of loans are not intended to be used the same way as a 30 year fixed traditional loan – get the loan, make 360 monthly payments, never having to think about it again.
Less favorable doesn’t always mean bad. The interest rate will be higher than a conventional loan, the down payment requirements may be higher, and the points to initiate the loan may be increased. Depending on what you are trying to accomplish and the particulars of your individual situation, a bridge loan may actually be a good option for you.
These loans are not intended to be held for 30 years, so the higher interest rate does not impact you as much as it would on a traditional loan. If you are recovering from a derogatory credit event and just have to wait until enough time has passed since the event, a bridge loan may be a good way to get you into a house now while prices are low. After your credit event is “seasoned,” you go to a traditional lender and get a refinance loan and pay off the bridge loan.
Contact an Addicted Realty Realtor today and we will discuss your home needs and put you in contact with a financing specialist who can help determine your financing options.
Addicted Realty is not a mortgage lender and does not provide mortgage or financing advice. The above information is provided as a courtesy to our clients and is not a substitute for guidance provided by a licensed mortgage professional. Always consult a mortgage professional, tax professional or attorney prior to signing any mortgage or financing related documents.