This is a short-term loan with the purpose of providing financing to an applicant during a time of transition. Currently, the most often transition for which a bridge loan is used is at a time of selling a Boston condo and purchasing a new Boston condo for sale. It is often used by homeowners that need a quick transition such as relocating for work. A bridge loan can help an applicant with the cost of purchasing a new home before they have sold their old one.
A bridge loan is secured through the collateral on the current home you own. A bridge loan is not a substitute for a mortgage it is only short-term help designed for repayment within six months to three years.
This is most commonly used by Boston condominium sellers who find themselves in a tight time crunch. Each bridge loan can differ greatly from the next as far as specific terms, costs, and conditions. There are some bridge loans that are laid out to fully pay off the first home’s mortgage when the bridge loan closes. Yet there are other types of bridge loans that will combine the payment on the sold property with the payment of the newly purchased property.
Some bridge loans also offer different ways of paying interest. Some loans might carry a monthly payment and others might require upfront, end-of-term, or lump sum interest payments.
The loan lasts from anywhere between 6 to 12 months and is secured by the applicant’s current owned home at the time of loan issuance
A bridge loan is hardly ever extended except in a rare case where the borrower agrees to finance the home they are about to purchase with the same bank
Bridge loan rates can range anywhere from the current prime rate to the prime rate with an additional 2%
The process of applying for a bridge loan can look very similar to that of a traditional conventional mortgage loan. One of the most notable ways in which it resembles a traditional loan application is an evaluation of your credit score and debt-to-income ratio. With a…