If you’ve never heard of a bridge loan, you’re not alone.
Many traditional lenders don’t offer this type of loan to consumers. But bridge loans can be a huge help during in-between periods when a homeowner is faced with a difficult decision.
These types of in-between periods might include wanting to quickly put an offer on a home while you’re waiting for your current home to sell. In a seller’s market, buyers often are faced with time-sensitive decisions where their hands are tied.
Fortunately, there are experienced lenders you can turn to for a consumer bridge loan if you need one. Private money lenders aren’t bound by the same rules and regulations as traditional lenders, so they can offer more flexibility.
Learn the greatest benefits of bridge loans and how you can get one.
What is a consumer bridge loan?
A bridge loan “bridges the gap” between cash needs and availability.
With this type of loan, homeowners can access immediate cash to put a down payment on a new home while they wait for their current home to sell.
Real estate investors of all skill and experience levels also use bridge loans while waiting between the purchase of one property and sale of another.
These loans are short-term, and meant to last only until a borrower is able to obtain permanent financing. So when a homeowner’s old home sells, they will pay back their bridge loan and get a new mortgage loan.
5 benefits of a consumer bridge loan
To the right borrower, consumer bridge loans offer numerous benefits.
Take a look at these five bridge loan pros to help you determine whether this type of loan could help your unique scenario.
1. Don’t have to wait for your current property to sell
While it would be ideal for you to sell your current property before you purchase a new one, there are many life scenarios where this just isn’t an option.
In a seller’s market, where there’s a greater demand for homes than properties available, you may need to act fast and put an offer on a home before it’s gone. You don’t have time to wait for your own home to sell or you may very likely lose your opportunity.
Plus, if you can’t afford a down payment on a new home until your current home sells, you’re stuck.
Borrowers who want to fix and flip homes for additional sources of income and savings also can use bridge loans to purchase a new property while you wait for your current one to sell.
2. Put a contingency-free offer on your new home
With a consumer bridge loan, you have the freedom to confidently make an offer on a home that’s contingency free. This means you are telling the seller you can buy the home without selling your current home.
Sellers find contingency-free offers appealing because they don’t have to wait to sell. This could potentially move you ahead of the pack when a seller has multiple offers and is looking for the simplest deal.
Also, some sellers don’t accept contingent offers at all.
What’s your loan scenario?
3. Avoid paying private mortgage insurance (PMI)
With a bridge loan, you may be able to afford to make a 20% down payment on your new home. This means you wouldn’t have to pay private mortgage insurance (PMI) on the mortgage loan for your new home.
No PMI means you will pay less per month on your mortgage.
Plus, even if PMI isn’t a concern to you, at the very least a larger down payment means a smaller loan to repay.
4. Have access to your current home while you build your dream home
Another common consumer bridge loan scenario is when a family is ready to build their dream home, but are either unable to sell their current home first or need a place to stay while it’s being built.
Not everyone has family or friends to stay with, or the means to rent another space to live while they wait for their current home to sell.
A bridge loan takes the pressure off these families by allowing them to remain in their current home while the new one is built.
5. Private money lenders can provide bridge loans fast
Most traditional lenders do not offer bridge loans to consumers. If they do, the terms and conditions can make it too difficult for the average borrower to fulfill.
Traditional lenders see bridge loans as a higher risk, so they have to take additional measures to protect themselves. For example, you could be required to have 20% equity in your current home in order to use those funds, plus excellent credit.
Private money lenders make the process simple and quick, because they are not bound by the same rules and regulations as traditional lenders. Instead, they use a common-sense approach backed by years of industry experience.
How to get a consumer bridge loan
If you’re new to private money lending, we are glad to have you here. Marquee Funding Group is an experienced team of savvy real estate investors. We fund all types of loans in both the consumer and commercial marketplace, including bridge loans.
The Marquee team strives to offer access to borrowers who cannot find a source of institutional financing. If you’re a homeowner in a bind between selling and buying your home, we can help you.
- Immediate review of your loan scenario
- Funding in as fast as seven days
- Quick, in-house loan application, document request, and underwriting
- Loan amounts from $50,000 to $20 million
If you’ve been told by traditional lenders that your loan scenario is too challenging, submit your scenario to our team today and we will review it immediately.