Selling a home can be stressful, especially when it comes to financing. Applying for a traditional mortgage can be cumbersome and isn’t ideal if you’re trying to move to another city or state. Fortunately, hard money loans, also called bridge loans, can help you take advantage of your home’s equity without waiting for it to sell. Additionally, this type of financing has several unique benefits to offer homeowners — in fact, here are the top five reasons to get a bridge loan.
1. Fast Cash
Applications for hard money lending are processed very quickly. In some cases, you can get funding in as little as 24 hours. When you’re looking at a competitive housing market, this can be crucial, as it allows you to jump on your dream home before another buyer snatches it up.
In contrast, traditional mortgages can take over a month to give you an answer. This can slow down the whole purchasing process and is especially inconvenient if you have a deadline for moving.
2. Minimal Paperwork
Hard money lenders in California offer fast approval times because there’s minimal paperwork compared to traditional mortgages. Instead of focusing on your credit history, lenders are more interested in the collateral of the property, as it’s assumed the loan will be paid off once you sell. For this reason, lenders can offer as much as 80% of your home’s value without going through the time-consuming checks that traditional banks and credit unions are required to do.
3. Short Loan Terms
Bridge loans usually last 2 years or less. Mortgages can last up to 30 years, which is a huge commitment when you’re only looking for stop-gap financing.
Additionally, the monthly payments on hard money lending are interest-only. That makes for a lower monthly payment, which may be convenient for homeowners who are still making a payment on their old property.
4. No Sale Contingency
Once you find your dream home, it’s time to put everything down in black and white. Traditionally, you have to agree to a sale contingency clause if you haven’t already sold your home; this clause makes the sale of your new house contingent upon the sale of your old one. That means if you can’t find a buyer in time, you may lose the perfect property. A hard money loan, however, provides the funds to purchase the new property outright.
5. Ideal Bargaining Position
Finally, having cash-on-hand puts you in a great bargaining position. Homeowners may be more willing to sell to you than buyers who are waiting on approval from banks, especially if they have a deadline for moving out. You may even be able to negotiate a lower price if the seller feels it’s more advantageous to have less of a sure thing than more of a future promise.
If you want a fast closing, then a hard money loan is the way to go. Private money lenders can help you find the perfect loan for your needs and get the cash to you faster than any traditional bank. With just a short application, you can get a bridge loan and the perfect house.
