Bridge Loans – Five Reasons You May Want to Consider Getting One

There is much to know and consider about bridge loans in Massachusetts. Although it’s often layered with legalese and business speak, a bridge loan is a short-term loan which acts as a “bridge” loan for a borrower who may be in the process of refinancing between one conventional loan to another or may need financing for a short period of time where obtaining a long-term conventional loan with a fixed rate just doesn’t make sense.

Most frequently, bridge loans in Massachusetts are loans against a current home, in order to make the down payment on a new home. Often, Bridge loans in Massachusetts may be a good option for purchasing a new home before a current home has sold. A borrower can use a portion of their bridge loan to pay off their current mortgage while using the rest as a down payment on a new home. Also, a homeowner can use a bridge loan as a second mortgage that covers the down payment for their new house.

The experts agree. There are many reasons why bridge loans in Massachusetts could be the ideal option. Providing a safety net for the possibility purchasing a new home, while a current home is on the market; the ability of putting a down payment on a new home without using the profits from selling an old one, and deferring payments or interest-only until the old home is sold.

While buying a home is the epitome of personal, the reasons for getting a bridge loan in Massachusetts are also individual and personal. According to facts and figures, in addition to loans against a current home, in order to make the down payment on a new home, 5 common reasons for bridge loans in Massachusetts are:

•  Buying a rental property, with the intention of renting it out, letting it appreciate over time, and/or selling it after prices increase. Typically, these types of borrowers use bridge loans in Massachusetts as short-term solutions until they can refinance with a traditional bank.

•  Buying at auction. Bridge loans in Massachusetts can provide funds to win the bid without having to come up with cash. Usually, enough equity in the primary home or owning it free and clear are requirements.

•  Relocating. Relocating to another city, bridge loans in Massachusetts can quickly provide the necessary capital to purchase a new property before the current property is sold.

•  Flippers. Investors, also known as “flippers,” often find the conventional lending world reluctant to finance their projects. Bridge loans in Massachusetts are hassle-free solution for properties that need repair, because most conventional lenders are not interested in making loans on properties in need of major repair.

•  Business Owners. Pulling cash out of existing properties with significant equity can free-up proceeds for business purposes.