With today’s market conditions, losing out on an investment property purchase simply because you’re not able to find financing quick enough is always a possibility. Using hard money bridge loans empowers you to close a deal fast. And streamlined loan processes mean a higher success rate when purchasing your dream investment.
What is a Bridge Loan?
A bridge loan is named after its function: to bridge the gap between an immediate funding need and permanent financing. Because it is not used for long term financing, it is sometimes called an interim loan or interim financing. A bridge loan is a short term loan.
Real estate investors use bridge loans for home purchase, as having cash on hand to close a deal can, at times, be the only leverage a buyer has in very competitive markets. It is also not uncommon to use a bridge loan for down payments, closing costs, and fees. For an investor who wants to maintain cash position while closing several deals in the span of a few weeks, this is an effective option. Similarly, a construction bridge loan provides investor capital to jumpstart construction and rehab projects.
Overall, a real estate bridge loan works by providing fast capital for investors to close deals, real estate professionals to improve properties, and contractors to fund construction and rehab projects. Typically because these loans originate from hard money lenders, and not mortgage lenders, a home buyer wouldn’t use this loan to buy a new home or to update an existing home they currently occupy.
How do bridge loans differ from traditional mortgage loans?
Intrust Funding is a private lender serving Western Washington. As a private money lender, we differ from traditional lenders because our loan requirements are not subject to federal banking regulations, nor do we have to make our loan offers contingent on credit scores. Since we are an equity loan lender, a bridge loan from Intrust Funding is underwritten by the After Repair Value (ARV) of the acquisition or by the value of other properties owned by the borrower.
The advantage of the bridge loan lender system is manifold. For one, it diminishes the barrier to entry for new investors. Bridge loan terms, as equity based loans, have significant differences to traditional mortgage loans, particularly the fact that these loans do not depend on a borrower’s credit score. For a home equity loan, bad credit is not a huge factor. Furthermore, a bridge loan allows an investor to be adapt to always fluctuating market conditions, purchase properties with cash, and fund rehab and construction projects without diminishing cash position.
Get cash fast by prequalifying for a bridge loan from Intrust Funding today!