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You need the money right away. But financing is still four weeks away. What do you do? Well, you get a bridge loan. . Though nothing prevents bridge loans from being used in many places, the reality is that they are mostly used in real estate. Here the loan is used the means for tiding over on the mortgage of a new home while the previous one is either currently in the process of being sold, or still not put up on the market for sale. There might be an opportunity that you might not want to miss out on. This is where a bridge loan becomes helpful. Additionally preventing a foreclosure is a common use too. Bridge loans are of great help to those who are in urgent need of funds to close on a new residence so that the current home can also close on the contract of sale. This requirement is usually the main reason why most people avail of the bridge loan. There are two types of this kind of loan: closed loans are for those whose contract for the sale of the property have been signed, and have pushed through. The lenders willingness to grand a closed loan is higher, especially if it likes to maintain a low portfolio risk. A set-up fee is required before processing, and the interest on the loan is paid in bulk when the funds from the sale of the property come in. Open loans are for those whose property have not been sold yet, or the contract for the sale is still under negotiation. Open loans are difficult to come by, unless they are based on a long standing relationship with the lender. Because of the risks involved on the part of the lender, the rates for the open loan are naturally higher than the closed loan. This loan can become complex, as the lender may even require the borrower to put up his new home as security for the loan, in case he does not have any other collateral to put up. Bridge financing as an alternative mechanism for funding is on a decline as banks are refusing to assume so much risk. The terms of the loan do not complement most banks' lending criteria, and it may encounter difficulties in justifying the practice to investors and government assessors. Though banks are frowning on them, there are specialist lenders who like to give bridge financing. In applying for the approval of a bridge loan, the lender usually will ask for a copy of the mortgage offer on the new property, the terms and details of the agreement, and further supporting proof of the status of the current home on the market (whether or not it is really up for sale). To cover the risk of the lender, you, as the buyer, have to be candid with them. Open loan lenders will expect you to pay at least a year of installments before they might consider reworking your payment plan. I am sure you are keen to know more about bridging loans. Also locate a mortgage broker and find out about adverse credit mortgage.
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bridging loans, mortgage broker, adverse credit mortgage,
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