Introduction to Bridge Financing
Bridge financing accounts for a short-term funding solution utilized by house owners as a bridge till they close the sale of their current home. Bridge loans allow homebuyers to put an offer on a new home without having to sell their existing one. Such a financing solution comes with high costs and requires the borrower to have 20 percent equity in their old home and suits the volatile real estate markets. How bridge financing assists homeowners Bridge financing helps homeowners in smoothing out the transition from one home to the other. A homebuyer can utilize bridge financing in the following ways: Bridge financing acts as a short-term loan for the complete value of the present house. The buyer gets the bridge loan to pay off their existing mortgage and the excess goes towards the down payment on the new house. Once the sale of the present home closes, the house owner pays off the complete bridge loan. Bridge financing serves to be a second mortgage on the present house that is s