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Bridging Loan

When a person buys a home, sometimes it can be difficult when there is a complex sell at hand.  For example, if you currently own a home, but you need to move and want to buy a home, how do you go about doing it in order to make the down payment on your new home? For those that live in the UK, Bridging loans are very popular.  In the USA, bridging loans are also considered to be signature loans, and many people use their home equity lines of credit to be able to foot the bill.  Let's go over how bridging loans are obtained, and how they can be used to bridge the gap in a sales transaction. 

Unlike a mortgage refinancing situation, when you are buying a home, you usually need a down payment in order to get the loan approved to close.  The problem is that this amount needed can be hard to come by for many people, so getting a bridging loan is a great way to fill the gap.  These types of loans are typically given at a higher interest rate as the amount of money is relatively small.  Many people who get these types of signature loans must get a credit approval, and may even have to attach the loan to an asset such as a vehicle or other belongings.  Once the money is approved, the person would then use this money at closing in order to obtain the home loan.  

It is important to note that when doing a mortgage refinance, or when buying a new home, the lender may require proof of seasoning.  This means that they want to see some history of your assets, meaning that you have had your assets for a long period of time.  Bridging loans may not meet the requirements that the lender has as it has not been seasoned.  The only way to know if these types of band aid loans will work is by discussing the guidelines that your lender is requiring.  

As you can see, when a down payment gets hard on a bad credit mortgage, or a purchase, getting bridging loans is a great way to make up the difference. While you will have to pay off this loan eventually as well as your home loan, it can provide a temporary solution in order to get you into the home that you are interested in buying. For many people, this solution works well and ends up helping them get the home they have always wanted. 


  10 Steps to Home Ownership:

Step 1: Are You Ready?

Step 2: Hire a Realtor

Step 3: Get Loan Pre-approval

Step 4: Search for Homes

Step 5: Choose a Home

Step 6: Obtain a mortgage

Step 7: Make an Offer

Step 8: Insure Your Home

Step 9: Close the Deal

Step 10: Avoid Foreclosure


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