Are you interested in buying a property quickly because you need to utilize the incoming funds from the sale of your current home to help you buy a new one? Sometimes in that situation, the closing and sale dates don’t always align, causing financial stress, however, in certain circumstances, bridge loans can help to provide financing for a new home in the event that you are unable to access funds that you were anticipating to have. If you are interested in financing a property in Kansas City, Missouri, and have questions about the financing options that are available to you, KC Investor Funding can help. Read on to learn more about financing a property using a bridge loan.
What Is a Bridge Loan?
Bridge loans assist home buyers in purchasing a new home while they are waiting to sell their currently owned property. Bridge loans allow borrowers to use the equity from their current property to afford the cost of a new one, (including closing costs and the down payment, allowing borrowers to put 20% down and avoid private mortgage insurance fees). A bridge loan can also help to give you an advantage over other buyers because funding happens quickly to allow for an expedited home sale. Bridge loans do tend to have higher interest rates than other loan types, and in certain cases, homeowners that have not fully paid back their original mortgage end up having to make two mortgage payments until the sale of their first home. Bridge loans usually must be paid off within one year, and most borrowers use the money from the sale of their previous home to pay off the bridge loan. It is important to note that bridge loans usually are backed by collateral, such as other real estate or inventory from a business.
What Are the Benefits of a Bridge Loan?
Bridge loans can offer many advantages for a borrower, including:
- Offering financing at a rapid rate, allowing for an immediate flow of cash
- They allow for the flexibility to buy the home that you want before selling your current property
- You may have an advantage over other potential buyers because sellers may be more favorable to offers that are not contingent on the sale of another home first
- Bridge loans offer convenience if you need to relocate quickly
Get Help Applying For a Bridge Loan
If you are interested in buying a home immediately, and looking for an alternative to a traditional mortgage, a bridge loan may be a good financing option for your situation. If you need help determining your financing options in Kansas City, Missouri, and have questions about bridge loans, contact KC Investor Funding today for a consultation.