If you need a quick financing solution to facilitate a property purchase, bridge loans may be the way to go. This article looks at how they work.
As their name suggests, bridge loans help span a gap: Individuals and companies alike use them as a temporary financing solution until longer-term financing can be secured, as explained on Investopedia. These are used in the commercial real estate arena. They tend to feature a shorter application and approval process than traditional loans, making them attractive when time is of the essence.
Commercial Real Estate
In the realm of commercial real estate, borrowers often use bridge loans to finance the initial purchase or improvement of a property. This financing option allows a borrower to move quickly and pounce on opportunities. Then, the borrower can either sell the property down the road or switch to a different, permanent financing option.
Applying for a Bridge Loan
Like other types of loans, bridge loans require an application. Keep in mind that the borrower will remain responsible for standard real estate fees, such as notary fees, recording fees, escrow, and title insurance. For the application, borrowers need to provide information on their income, current debt, assets, the property they currently own, and the property they wish to purchase.
For more information on how the financing world works, check out the rest of Pendleton Commercial Financing’s blog posts.