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Services
Articles: Real
Estate - Mortgage Bridge Loans
By Adam
Smith
Let’s face it.
Finances can get really tight sometimes. It doesn’t matter if you
are an thriving individual or a growing business. At some time or
another, we will all run into the same sort of problem. Our savings
will be low, our cash flow dwindling, and we will still be in need
of making a financial move that can’t wait.
For
instance, an individual might be ready to move to a bigger house,
but is confronted by the finance problem. How do you space the gap
between paying off your current mortgage, coming up with a down
payment for the new house, and securing the mortgage on that house
as well? Obviously, you must take advantage of some financial
instrument to help you transition from the old mortgage to the new
mortgage. A mortgage bridge loan provides the answer to your
problem.
Many businesses face a similar problem. They are in
desperate need of temporary or short term financing so they can sell
their commercial properties or transition smoothly into a
refinancing solution. Again, their problem is one of time. They need
a quick, yet short term answer to their financial concerns, and a
mortgage bridge loan provides just that.
Have you ever
had to cross a bridge to get from point A to point B? Normally, a
bridge is erected to help us get through the terrain we might not
otherwise be able to navigate by ourselves. Most of us can’t drive
across rivers, bays, or lakes. We need assistance to do so, and a
physical bridge allows us to reach our destination. A mortgage
bridge loan works in much the same way. In this case however, the
bridge that is built serves as a financial bridge, allowing us the
flexibility we need to get from one point in time to another point
in time. In this sense then, a financial bridge spaces time, not
water.
Now that we have a better understanding of what a
mortgage bridge loan is, let’s examine a couple of scenarios where a
mortgage bridge loan might prove beneficial.
Suppose
you are buying a new house and to move into your new house you must
first sell your old house. Essentially, to make the move you must
perform two separate transactions. First, you must sell your current
home. Second, you must close on your new home. Ideally, you can
complete these two transactions smoothly with little or no problems.
However, unless you have a respectable amount of savings or a high
positive cash flow, you will likely need some extra cash to put down
on your new home as you wait to close on your old home.
In
such a scenario, a mortgage bridge loan helps you cover this
shortage of cash. Typically, a personal mortgage bridge loan is
structured in one of two ways. It can either be used to pay off the
old mortgage and sign for the new mortgage, or it can might be used
to combine the old and the new debt into a single mortgage. Either
way it eliminates the cash flow issue and allows you to move into
your new home.
Businesses constantly require financial
assistance as well. Suppose your business is looking to acquire some
commercial properties, such as retail developments or business
parks. Your commitment to theses properties is only temporary, thus
you are not interested in a long term business mortgage loan.
Rather, your interest in these properties is as a short term
investment and so you are in the market for short term lending. A
mortgage bridge loan will then allow your business to acquire
financing for a relatively short period of time, say 1 – 3 years,
and you are free to sell the property when an acceptable bid is
offered.
Mortgage bridge loans can assist almost any
kind of customer, whether they are individual or a business. As a
financial tool, these loans help bridge the gap of time created by
other financial instruments. Each instrument or tool has its place
in the financial realm, and it is up to us to understand them and
use them appropriately.
Adam Smith is a client account specialist with
http://www.10xMarketing.com For more information about a mortgage bridge loan,
please visit http://sncloans.com/mortgage-bridge-loan.html
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