Bridge Loans: Advantages vs. Disadvantages
If you are thinking about taking out a bridge loan, you probably want to know what’s involved, as every bridge loan scenario is different. Every borrower has unique needs that will affect which loan is best for them.
Disadvantage: Higher Rate and Fees
Bridge loans can be fairly expensive. There can be a number of fees and costs associated with a bridge loan, including:
- High closing costs
- Appraisal fees
- High interest rates
- Lender Origination fees
In addition, you may be owning two properties while you wait for your first property to sell. As such, you may have to pay on two mortgages at the same time. Bridge loans are more suitable if the property you’re selling can be sold quickly.
Advantage: Fast Financing
Some bridge lenders can close a loan in a matter of days, not months like traditional lenders. This quick transaction time may outweigh the higher interest rate and fees associated with a bridge loan.
If you have to close on a real estate transaction quickly and you feel you are getting a good deal, the higher fees on a bridge loan may not matter as much, especially if you are planning on paying the loan off in a short period of time.
Disadvantage: Shorter Loan Terms
Compared to traditional loans, bridge loans must be paid back relatively quickly, usually between 12 and 24 months. While it may be your plan to pay off your loan sooner than later, there is never a guarantee that your property will sell quickly and you run the risk of a balloon payment if your loan matures.
Advantage: Less Documentation Required
With a traditional loan, you will need sufficient income documentation, like bank statements and tax returns, which shows your ability to make the monthly payment on your loan. However, bridge lenders are less concerned about your ability to make your monthly payment and more concerned with the equity in your property.
A bridge loan may be a better alternative if you’re retired, self-employed, currently unemployed, or have significant equity in your property. While finding a loan with the aforementioned circumstances can be challenging, a bridge loan may offer a solution that a traditional loan cannot.
Apply for a Bridge Loan from Wilshire Quinn Capital
By knowing the advantages and disadvantages of a bridge loan, you are now more informed about the bridge lending process. If you still have questions, reach out to the loan experts at Wilshire Quinn Capital. Since 2011, Wilshire Quinn has helped numerous property owners obtain the financing that need, quickly and easily.
Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060. The information contained above is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc. Any and all information is deemed reliable but is not guaranteed.
- Funding typically in 5-7 business days
Loan Amounts from $200,000 to $20,000,000
- Interest Rates from 8% to 10.5%
Loan Term: 3 – 24 months
Commercial & Residential (non-owner occupied) Real Estate
- Purchase, Refinance, Cash-out Refinance, Rehab, Blanket Loans
Foreign National Loans Available
About Wilshire Quinn
Wilshire Quinn is a San Diego hard money lender focused on short term bridge loans, secured by first trust deeds. The company is based in San Diego, CA with offices in Los Angeles and San Francisco. Wilshire Quinn typically funds loans for their customers in 5-7 days. Their successful track record is closely linked to their ability to make immediate lending decisions based on their highly disciplined underwriting approach. The company funds a variety of loans such as: refinance, purchase, blanket, rehab loans, 1031 exchange, partnership buyouts, and more. They originate hard money loans ranging from $200,000 – $20,000,000. Wilshire Quinn works with commercial and residential buyers nationwide.
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