How to Find Residential Bridge Loan Lenders: A Guide

About 30{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} of real estate sales are from cash buyers. The remaining 70{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} use some type of financing to buy a property.

There are many mortgage products available to finance a real estate deal. You can use a conventional loan, government-backed loan, or a bridge loan.

A bridge loan is a short-term loan to help close a real estate transaction. If you need help closing your transaction, a bridge loan might be a solution.

Keep reading to learn more about bridge loans and how to find residential bridge loan lenders.

1. Find Lenders That Work With Residential Bridge Loans

You’ll find that most lenders don’t work with bridge loans. Banks tend to see them as risky endeavors since they’re short-term loans. 

There are two types of bridge loans. One is for homeowners who need cash to bridge the gap between the sale of one property and buying another.

Residential bridge loans help buyers secure a home before the old one sells. That bridge loan is used as a down payment and takes the stress out of waiting for things to line up just right.

There are bridge loans for real-estate investors. These loans are also short-term loans, usually between 12-24 months.

Investors who buy real estate to fix and flip find these loans helpful. They use the loan to finance the purchase of a property and the renovation.

They sell the home for a profit and pay the loan back with the proceeds.

You want to make sure you find a bridge loan lender that works with your specific needs.

2. Lender’s Qualifications

What is the lender’s approval process? Compare that with your current financial situation.

You want to make sure you can qualify for a bridge loan. Residential bridge loan lenders will look to see if you can pay your home mortgage and the bridge loan.

Contact lenders and find out what their qualifications are. Be sure to clean up your finances and credit score before contacting them.

3. Rates and Fees

Prequalify for a home bridge loan to compare interest rates. These loans will have higher interest rates than your mortgage because they’re short-term loans. Don’t be surprised to see 8{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} interest rates for a bridge loan.

Bridge loan lenders charge a number of fees to process the loan. Closing fees are usually between 1{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} to 3{5ab75762cf707683d7af2475431dd95a23fbc9cf5cb8a45517116f350cf35bde} of the value of the loan. 

4. Reputation

Do a thorough review of lenders before committing to one. Read online reviews, get referrals, and see what kind of customer service they offer.

There are some residential bridge loan lenders that are nothing more than scams. If they ask for a payment before they issue funds, it’s a scam.

Finding Residential Bridge Loan Lenders

Bridge loans are used to help homeowners and investors facilitate a real estate transaction. Finding the right bridge loan lender can be difficult.

Look for residential bridge loan lenders that have the product you need with the right rate and reasonable fees. Be sure to check out the blog for more outstanding home tips.