A couple saw a nice house that was put up for sale but they do not have enough money to pay the down payment for this house. The seller was impatient to close the sale of their house because there were other interested buyers. So, in order to make sure that this couple get to secure the purchase of the house, they needed to take a bridge loan as they could not wait for their own house to be sold.
A bridge loan is a temporary loan that is used to pay the down payment for the new home while waiting for their existing house to be sold, but a bridge loan comes with its risk. Many prefer taking a bridge loan from a bridge loan lender California to fund the down payment for their new home first before selling off their existing home. A trusted financial advisor would advice the buyer to wait for their existing house to be sold off first before committing to a new home, because you will not be sure how long it will take for your existing house to be sold. It may take longer than expected. Compared to the home equity loan, a bridge loan has more benefits for some borrowers.
The rates for bridge loans vary and fluctuate among the private money lenders San Diego. The bridge loan carries no payment for the first four months. The interest will accrue and be due when the loan is paid upon the sale of the existing house. There are many private money lenders who offer fast funding at attractive interest rates. Before you commit to borrow borrowing from a hard money lender, it is advisable to perform a thorough check on the lender’s reputation and business dealing.
Some of the advantages of taking a hard money loan:
- Once the required documents have been submitted to the private money lender, the loan can be pre-approved within one or two days. The lenders mostly focus on whether the asset itself has good market value, plus the borrower equity is at least 20%. A normal loan may take about a month or more to be approved, but a bridge loan could be obtained within a week.
- A borrower of a bridge loan has the freedom to discuss with the money lender to reach a mutually agreeable repayment plan.
- Compared to the normal financial institution, the private money lenders demand lesser requirements to qualify for the loan.
- With private money lenders, borrowers have the freedom to pay off their loan prior to the maturation date without being penalized.
- Private money lenders are more interested in the property value and the borrower equity than the borrower’s credit history.