Bridge loans – Smart home buying strategy for today’s real estate

Real estate agents, home buyers or home sellers alike should know about this home loan or should I say smart home buying strategy: It is called the "Bridge Loan".

A bridge loan is beneficial for the key following reasons:

#1. A Bridge loan is deemed cash by Listing Agents.

#2. Your Buyer does not have to have a contingency of their home selling to use a

       bridge loan.

#3. A home owner can buy another house now and sell their home later.

#4. There is no fear of the buyer finding their dream home because they still have to sell

       their current home at the same time. This is not required with a bridge loan.

#5.Your buyer can buy a fixer, fix it up and have their dream home that way.

There are some requirements to qualify for a bridge loan, including:

This will be a 12 month loan; You have to have at least 20-25% for the downpayment; 

Rates range between 9-12%, interest only; A minimum of 3 months payments are due.

For an even clearer understanding, here is a quick example of a Bridge loan:

If a Buyer gets a $300,000 loan at 10% interest only then their payment will be $2,500.

For sure a home buyer can afford this payment, especially in today’s real estate market with the prices increasing and rents out the roof. Points will depend on the size of a loan.

Anyone thinking of buying a home – whether a first-time home buyer or a move-up or move-down buyer - does not want to wait as it will only cost them more money in the long run.

No banks offer such a loan but there are some niche and experienced Lenders who do and once you find them, they can save your day!

Best, Ken