What’s a “bridge” loan?
August 30th, 2008 By Peter G. Miller
A “bridge loan” is financing secured by your current home, a home typically listed for sale. The bridge loan is used to finance the purchase of the second home and is paid off when the first home sells.
In addition to other questions, when considering a bridge loan seller/borrowers should ask about interest costs, up-front fees (because bridge loans are short-term financing, it’s typically better to pay a higher interest rate than points for a loan which will generally last just a few weeks or months), and what happens if house #1 takes longer to sell than anticipated.
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