Colorado Bridge Loans

A bridge loan is a short-term loans used to quickly close on a property, retrieve real estate from foreclosure, or take advantage of a price discount. The "bridge" buys the borrower sufficient time to arrange traditional long-term financing,  improve/re-position a property for re-sale or close on the sale of another piece of property.  A bridge loan is typically paid back when the collateral for the loan is sold or refinanced with a traditional lender, Most hard money loans could be called bridge loans in that their terms are usually of short duration and will be re-paid via re-sale or re-financing.   A bridge loan does not have to be a hard money loan, however.  While banks and other traditional lenders can, and do, make bridge loans, a borrower will often turn to a hard money lender for a bridge loan because a hard money lender can move more quickly and will typically require less documentation. Because the loan will be outstanding for only a short period of time, the cost of the money may not be material when looking at the transaction as a whole.  The money saved by quickly taking advantage of an opportunity often more than offsets the cost of the loan needed to take advantage of that opportunity.

 

Posted in Hard Money, Real Estate