How Do Bridge Loans Differ From a Traditional Loans?
The application process for a bridge loan is generally quicker and less stringent than that for a traditional loan. While a traditional mortgage loan typically takes months to close, a residential bridge loan can be closed within days.
This is particularly beneficial in the current fast-moving real estate market, where property deals must be closed quickly to avoid missing out.
There is a lot more red tape involved when it comes to securing traditional mortgages and loans. Bridge loan lenders don’t need to adhere to the same regulations and stringent approval process, meaning that they require less documentation and can work with an investor with a poor credit history or income-to-debt ratio.
What Types of Real Estate do Florida Bridge Loan Lenders Finance?
Hard money bridge loans are used by investors in need of short-term funding for new property investments. They typically apply to single-family homes, townhomes, condos, and multi-family up to 4 units (fourplex, triplex, duplex).
At Lightspeed Lending, all such loans are for non-owner-occupied properties because of regulatory and compliance rules. Lightspeed Lending’s residential bridge loan offering is not normally available for commercially zoned real estate.
Do I Need a Bridge Loan?
Bridge loan lenders tend to pay less attention to a borrower’s creditworthiness than a traditional lender would. Your bridge lender will be more interested in property value, as the property will be used as collateral on the loan.
This means that a bridge loan may be appropriate if you have encountered issues trying to secure a traditional loan. It may also be suitable for investors looking to use a loan to fund a fix and flip project or purchase a new property for rental.
How To Find a Bridge Loan Lender in Florida
Bridge loans are not available from the same places you procure a conventional mortgage; instead, you require a direct bridge lender. These lenders can be individual private investors or small businesses like Lightspeed Lending.
It is important to take your time to research the best provider to make your loan successful. Each provider will have different qualifying criteria and different terms and conditions for their loan product.
Conduct research on the various vendors to learn what the minimum credit score requirements are, what the minimum and maximum property values are, and what level of loan to value (LTV) is available.
Is a Bridge Loan Worth it?
So now that you know the details of what a bridge loan is, is it something you should consider? While they are not for everyone, when used correctly they can help improve your profit margins significantly.
Bridge financing is perfect for property developers who want to buy and flip property in near-term future.