Bridge Loans

Written by Ingrid Chen
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Bridge loans are perfect loans when you need to get over a quick financial hump. These differ from payday advance loans. With payday advance loans, you get a quick, small lump of cash to help out until your next payday. Bridge loans are used when you are currently working with a lender to do something like buy a new house or own your own business.

Bridge loans are generally good for a short period of time, usually 60, 90 or 120 days. An example of when you would use a loan like this is if you want to secure a new home while waiting to sell your old one. If you were to sell your old one, you could put a down payment on the new one. If that doesn't happen, you can consult with a lender and inquire about a bridge loan.

Most of the loan will go to pay off what's left of your mortgage on the old home. The rest will go to a down payment on the new one. Usually, you have six months to sell your old home. If it hasn't sold after that time, you will start to accrue interest on the bridge loan. Once the home is sold, the loan is instantly paid off.

Leave Yourself Some Breathing Room

Bridge loans allow you a bit of breathing room. They let you pay your bills while going ahead with some big investments. If you are looking to close an investment deal, the bank will go over your monthly cash flow to make sure that you will be able to pay back the bridge loan in a short amount of time. As long as everything is in line, you should be all set. This is one kind of loan where the whole thing can be paid back at one time.

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