There are many different types of loans that people are capable of pursuing. Each one entails something different, but when you know the ins and out of each, you can better find the one that is most appropriate for your individual situation. One of the many loans that we talk about here on our blog at Abbey Mortgage and Investments, is a bridge loan. A bridge loan is used to provide helpful financing for purchasing a multi-family property. This type of loan is great for the interims as it gives plenty of time for the fixed rate and long-term exit. There is also more time for financing solutions to be developed and for the lender’s credit agency to be reviewed. Abbey Mortgage works to help our clients who are trying to obtain a multi-family apartment, manufactured house or student housing. If you are trying to determine if a bridge loan is the right financing option for you, we can give are here to offer you with the information you need in order to move forward.
What is the Purpose of a Bridge Loan?
As mentioned above, bridge loans are most often used in order to finance a multi-family space or a commercial property. This is a method used in order for a buyer to obtain the funds that they need in order to complete the purchasing of a property. A bridge loan works as a financing option that will bring a property to a fully stabilized value and to ‘bridge’ an acquisition for reasons having to do with timing. This type of loan also helps to promote a positive cash flow by having the lender and their creditors determine what the right amount of the loan will be considering the property’s current performance.
It is also important to know that if the maturity date of the property is approaching and it doesn’t qualify as a high quality loan, the borrowers can be allowed to keep their property with the assistance of the bridge loan. Additionally, the borrower can be assisted in acquiring the property by loan when and if they are lacking monetary strength. This is why so many people consider bridge loans when you want to purchase a multi-family property in order to avoid missing an opportunity.
Should You Apply for a Bridge Loan?
If you need more time to overcome a financial delay (lingering credit issues, lack of cash flow etc), but you also want to close on a property quickly, then you are a good candidate for a bridge loan. The guidelines set by bridge loan lenders do not have a standard and therefore the terms of your loan can be varied. Both acquisition and refinancing opportunities are provided by bridge loans for multifamily housing as are flexible repayment schedules. Lastly, you should consider a bridge loan if the property you are wanting to purchase needs renovations that will exceed a high-quality loan.
How Much Do Bridge Loans Cost?
As such an attractive market, bridge loans are not exactly cheap for borrowers. For the most part, bridge loans will often run around two percentage points higher than the interest rate that is used on a 30-year, fixed rate mortgage. A lender can also choose to charge higher fees if they so desire.
Benefits of Bridge Loans
There are many benefits of bridge loans. While there may be additional expenses, bridge loans give the homeowners the opportunity to finance or refinance an investment with fewer qualifications and a faster closing process. The loan amount is also determined by the cost of the total project and what the completed value would be. Additionally, an income does not have to exist, although it would help to lower interest rates. Lastly, bridge loans may not require for payments to be made within the first few months, which allows for borrowers to have plenty of time to sell their home and find a new one for themselves.
Getting a Bridge Loan From Abbey Mortgage & Investments
If you are interested in learning more about bridge loans and how they can help you, we would be happy to explain it to you. Contact Abbey Mortgage and Investments today so that we can provide you with the information that you need.