Everything You Need to Know About Bridge Loans

What are they?

A bridge loan is a short-term loan taken out before a bigger and longer-lasting financing option is available; it may last for as short as 2 weeks and for as long as 2-3 years. These loans usually have higher rates than conventional loans, but they are easier to obtain and quicker to process. In most cases, bridge loans are taken out to secure time-conscious opportunities i.e. instances where there isn’t enough time to apply for—and get—long-term financing. Bridge loans are also particularly useful to people who are expecting payment from the sale of a property but need urgent money to secure another property. In this case, the loan acts as a bridge spanning the duration between when a payment comes in and when urgent capital is needed. In the case of real estate deals, a bridge loan is almost always paid back when the property is sold or when refinancing by a traditional lender is secured.

Who needs them?

For example, a man and his wife get new jobs in a new city, say San Diego. They plan to sell their old house and use the proceeds from it to make a down payment on a new house in San Diego. However, before they could find a buyer for their old house, they found a beautiful house that is situated conveniently close to both their new workplaces. They need some capital to secure the new place and they cannot afford to wait till their old house is sold—it may be too late by then. They have the option of taking a bridge loan, and as soon as the old house is sold, they can use part of the proceeds to pay back the loan. Another party that stands to benefit from bridge loans are developers. A developer in Orange County wants to begin construction work on a project but the permits are taking a little too long to get processed. They know for sure that the permit is coming within the next weeks, but traditional lending houses will never give out loans for such a high-risk venture. A bridge loan is a viable alternative in this case too; the developer can apply for a loan and start construction work. As soon as the permits come in, the developer can apply for a construction loan at one of the banks and use it to pay back the bridge loan and also complete the project.

Where/How to get one?

If you live in San Diego like the couple mentioned above, or in Orange County like the savvy developer, you can also benefit from the unique opportunity that bridge loans offer. Residents of these cities in California, along with the people of Los Angeles, no longer need to miss out on great real estate deals because capital is not readily available. Louie Loans is providing individuals and businesses with bridge loans that will help them secure the property of their choice before the opportunity is lost. Apply now and get funding in 10 days or less!