How Do Residential Bridge Loans Work?
It is not uncommon for a real estate investor to seek out a new project while another is already underway. But obtaining the capital for a second investment can be difficult, especially when you’re waiting for the sale of another property to finance the purchase of a new one. However, there is a loan designed to get you over that hump: the bridge loan. What is a Bridge Loan? A bridge loan — also known as a swing loan, short-term financing and gap financing — is exactly what it sounds like: a bridge from one investment to the next. It is a short-term solution (typically 6 to 12 months) to a common problem, giving real estate investors the money they need to get ahold of a new property while another property is awaiting a buyer. Essentially, a bridge loan is like borrowing your down payment for a new property. Real estate investors can borrow against their existing property while waiting for long-term financing to become available. Another use for this kind of loan ...