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In a hot real estate market, properties are snatched up within days and bidding wars are the norm, so buyers need every advantage they can get. One such advantage that investors and homebuyers are turning to is the bridge loan. A bridge loan is short-term financing used until a person or company secures permanent financing. It allows for buyers to purchase the new property they are interested in while they wait for their previous property to sell. Bridge loans give the buyer the competitive edge they need in the hot real estate market.
Here is a list of the many benefits of using a bridge loan as a buyer in a hot real estate market.
Fast Financing
In a competitive market, time is of the essence. With a bridge loan, buyers can access fast financing, allowing them to make quick offers and secure properties. When a desirable property becomes available many buyers are going to want it, having a bridge loan gives you the advantage to act quickly. By working closely with your lending, funding can be delivered in as little as two weeks after applying.
Flexibility
Bridge loans offer more flexibility than conventional mortgages. With customizable terms and repayment options, borrowers can tailor the loan to their own circumstances. Bridge loans can help cover the down payment or even the full purchase price of the new property while waiting for a current property to sell.
Avoid Contingencies
Bridge loans allow buyers to purchase a new property before selling their existing one, eliminating the need for contingency clauses in their offers. This means the seller doesn’t have to wait for them to sell before securing the property. This can make their offer more attractive to sellers in a competitive market. It gives buyers a competitive edge!
Opportunity to Get Your Dream Home
The quality properties in a hot real estate market go fast. A bridge loan allows you to secure your dream home without worrying about selling first. It eliminates the risk of missing out on an opportunity!
Alleviate Stress
Being able to have financial help when selling a property alleviates the stress of carrying two mortgages at once! Bridge Loans make the transition process more peaceful.
When investing with a bridge loan, it is always important to consider the potential risks so you can understand if it’s the right choice for you. Bridge loans have higher interest rates, shorter loan terms, and relatively higher market risk. To avoid these risks, weigh your options and have an exit strategy in place to guarantee you can repay the loan on time. Getting in touch with a financial advisor or real estate professionals can assist you in determining if a bridge loan is right for you.
While bridge loans offer numerous benefits, it's essential to carefully weigh the associated risks, such as higher interest rates and fees, and ensure a clear exit strategy is in place to repay the loan. If you aren’t confident in your ability to repay the loan, you may be better off avoiding this financial tool.
In conclusion, in a hot real estate market where timing is everything, bridge loans can be a valuable tool for buyers looking to gain a competitive edge and seize lucrative opportunities.
RCN Capital
Do you have a real estate project you would like to obtain financing for? RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are looking to finance an investment with a bridge loan, RCN Capital has competitive loan options available.
