What is a bridge loan?

A bridge loan is a type of loan that is used to provide short-term financing for a homeowner to purchase a new home before they have sold their existing home. Bridge loans are commonly used in the state of Washington and are regulated by mortgage law. Bridge loans are typically issued by commercial banks and private lenders. The loan amount is contingent upon the value of the home being purchased, as well as the equity in the home that is being sold. Generally speaking, bridge loans will cover up to 80% of the cost of the new home. The loan is then paid back when the existing property is sold. Bridge loans are usually for a short period of a few months, during which time the borrower must make payments on the loan. The loan can be used for a variety of costs such as moving expenses, closing costs and payment of the down payment on the new home. Additionally, bridge loans allow homeowners to purchase a new home before they have sold their existing home, giving them additional flexibility and time in the housing market. Bridge loans are beneficial for those who need short-term financing and are planning to purchase a new home in the near future. However, they should be used carefully as they can be expensive and risky. It is important to read through the terms of the loan and to ensure that all the costs are covered before signing on the dotted line.

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What is a bridge loan?

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