A bridge loan is a short-term mortgage that allows a borrower to purchase a property before selling their current home. The ideal sequence is for the homeowner to sell their current home, then shop; however, sometimes opportunities present themselves and the timing is not quite right. Bridge loans are a short-term solution for real estate transactions which generally require quick funding.
A property owner uses a bridge loan to borrow against the equity in their existing property to finance the purchase of a new property. When the listed property ultimately sells, the borrower must then pay off the bridge loan.
Bridge loans typically have a shorter term – less than 12 months. At Cushner Capital Group, our direct California bridge loan lenders can provide funding for hard money bridge loans on investment properties within a matter of 5-7 days. Owner-occupied residential bridge loans generally take longer to fund (17-21 days) due to added rules and regulations that must be adhered to for these loans.
Sometimes referred to as “gap financing”, “interim financing” or “swing loans”, the bridge loan serves several purposes. It allows the Buyers to purchase their new desired property without selling their new home – without that “contingency” written into the contract, making the offer less desirable. Additionally, sometimes Buyers do have their home in escrow, but then for reasons beyond their control, their Buyer fails to close. This option saves the borrower from making two moves, which can happen upon selling the primary and moving to a rental until the ideal home is found.
As the market slows down, the bridge loan may be more of a viable option for many. The borrower must have substantial equity for this to work. Call us to see if this is a possible solution for your challenges! At Cushner Capital Group, we are bridging the mortgage challenges, by offering creative solutions to help you achieve your real estate goals!
