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A bridge loan is a short-term loan utilized until permanent financing is secured or a current commitment is paid. It provides rapid cash flow, allowing the borrower to pay current obligations. Bridge loans typically have relatively high-interest rates and are secured by collateral, such as real estate or commercial goods.
These loans are frequently utilized in the real estate industry and are also known as bridge finance or bridging loans.
With interest rates continuing to stay at all-time lows and home values growing year-over-year, real estate investing has become a go-to for many portfolios.
Hard money loans are short-term, non-conforming loans for commercial or investment properties that are made by individuals or companies that do not require conventional forms of security. Hard money loans are an alternative for businesses that have been turned down for a regular loan or mortgage, or who just don't have the time to wait for the traditional loan approval process.
Hard money loans, like conventional mortgages, are secured loans backed by the value of the underlying property. "Hard" in "hard money" refers to the physical security for the loan. When a borrower fails to repay a secured loan, the lender can seize the collateral and sell it to recoup any losses.
Hard money loans, in contrast to mortgages and other secured loans, are approved swiftly and usually have fewer requirements, making them a good choice when buying something immediately is a priority.
From the time a mortgage is applied for to the time a deal is finalized, more than a month may pass. Loans from hard money lenders can be closed in as little as a few days.
Landlords have had a challenging year, to say the least. With layoffs and furloughs affecting huge swaths of tenants, evictions moratoriums, and rents dropping, it would seem like a good time to stay on the sidelines for the time being.
